<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    Form 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                   For the fiscal year ended December 31, 2006

                                       Or

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

            For the transition period from ___________ to ___________

                         Commission file number 0-30665

                          CNB Financial Services, Inc.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                          <C>
                 West Virginia                                    55-0773918
        (State or other jurisdiction of                        (I.R.S. Employer
         incorporation or organization)                      Identification No.)
</TABLE>

<TABLE>
<S>                                                               <C>
101 S. Washington Street, Berkeley Springs, WV                       25411
   (Address of principal executive offices)                       (Zip Code)
</TABLE>

                 Registrant's telephone number, (304) 258 - 1520

           Securities to be registered under Section 12(b) of the Act:
                                      None

        Securities to be registered under Section 12(g) of the Act: ____

                     Common Stock, Par Value $1.00 per share
                                (Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act.

                                Yes [ ] No [X]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Exchange Act.

                                Yes [ ] No [X]

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for shorter periods that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.

                                 Yes [X] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of "accelerated
filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]   Accelerated filer [ ]   Non-accelerated filer [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).

                                 Yes [ ] No [X]

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asking price of such common equity, as of the
last business day at the registrant's most recently completed second fiscal
quarter (June 30, 2006) was approximately $22.5 million. This amount was based
on the last closing sale price of a share of common stock of $80.00 as of the
same date.

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 458,048 shares of common stock,
par value $1 per share, as of March 26, 2007.

                      DOCUMENTS INCORPORATED BY REFERENCE:
                                      None

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY

                                TABLE OF CONTENTS

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                                                                            PAGE
                                                                            ----
<S>        <C>                                                              <C>
PART I

Item 1.    Business......................................................     4
Item 1A.   Risk Factors..................................................     7
Item 2.    Properties....................................................     9
Item 3.    Legal Proceedings.............................................    10
Item 4.    Submission of Matters to a Vote of Security Holders...........    10

PART II

Item 5.    Market for Registrant's Common Equity, Related Stockholder
              Matters and Issuer Purchases of Equity Securities..........    11
Item 6.    Selected Financial Data.......................................    13
Item 7.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations..................................    14
Item 7A.   Quantitative and Qualitative Disclosures About Market Risk....    28
Item 8.    Financial Statements and Supplementary Data...................    29
Item 9.    Changes in and Disagreements with Accountants on Accounting
              and Financial Disclosures..................................    59
Item 9A.   Controls and Procedures.......................................    59
Item 9B.   Other Information.............................................    59

PART III

Item 10.   Directors and Executive Officers of the Registrant............    60
Item 11.   Executive Compensation........................................    62
Item 12.   Security Ownership of Certain Beneficial Owners and
              Management.................................................    66
Item 13.   Certain Relationships and Related Transactions................    67
Item 14.   Principal Accountant's Fees and Services......................    68

PART IV

Item 15.   Exhibits and Financial Statement Schedules....................    69

SIGNATURES...............................................................    70
</TABLE>


                                        2

<PAGE>

FORWARD LOOKING STATEMENTS

     In our Annual Report and Form 10-K, we include forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products and similar matters. You can
identify these statements by forward-looking words such as "may," "will,"
"expect," "anticipate," "believe," "estimate," "plans," "intends," or similar
words or expressions. You should read statements that contain these words
carefully because they discuss our future expectations or state other
"forward-looking" information. We believe that it is important to communicate
our future expectations to our shareholders. However, there may be events in the
future that we are not able to predict accurately or control, including those
factors set forth under "Risk Factors" contained herein. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, we must inform
you that a variety of factors could cause CNB Financial Services, Inc.'s actual
results and experiences to differ materially from the anticipated results or
other expectations expressed in these forward-looking statements. Our ability to
predict the results of the effect of future plans and strategies is inherently
uncertain. Some of the risks and uncertainties that may affect the operations,
performance, development and results of CNB Financial Services, Inc.'s business
include:

-    Changes in market interest rates;

-    Local and national economic trends and conditions;

-    Competition for products and services among community, regional and
     national financial institutions;

-    New services and product offerings by competitors;

-    Changes in customer preferences;

-    Changes in technology;

-    Legislative and regulatory changes;

-    Delinquency rates on loans; and

-    Changes in accounting principles, policies or guidelines;

     You should consider these factors in evaluating any forward-looking
statements and not place undue reliance on such statements. We are not obligated
to publicly update any forward looking statements we may make in this Form 10-K
or our Annual Report to reflect the impact of subsequent events.


                                        3
<PAGE>

                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

ORGANIZATIONAL HISTORY AND SUBSIDIARIES

     CNB Financial Services, Inc. (the "Company") was organized under the laws
of West Virginia in March 2000 at the direction of the Board of Directors of CNB
Bank, Inc., formerly Citizens National Bank, (the "Bank") for the purpose of
becoming a financial services holding company. The Company and its subsidiary
are collectively referred to herein as "CNB".

     A special meeting of the Bank's shareholders was held on August 4, 2000,
and the shareholders approved the Agreement and Plan of Merger between the Bank
and the Company, whereby the Bank became a wholly-owned subsidiary of the
Company and the shareholders of the Bank became shareholders of the Company. The
merger became effective on August 31, 2000. Each Bank shareholder received two
shares of the Company stock for each share of the Bank's common stock. On August
31, 2000, the Company consummated its merger with the Bank and subsidiary, in a
tax-free exchange of stock. Shareholders of the Bank received two shares of CNB
Financial Services, Inc. common stock for each of the 229,024 shares of the
Bank's common stock. The merger was accounted for as a pooling of interests.

     CNB became a 50% member of a limited liability company, Morgan County Title
Insurance Agency, LLC in February 2001, for the purpose of selling title
insurance. As of January 2003, CNB's percentage of ownership in Morgan County
Title Insurance Agency, LLC decreased to 33%.

     The Bank was organized on June 20, 1934 and has operated as a national
banking association continuously until October 16, 2006, at which time the Bank
obtained a West Virginia state charter and began operating as a state banking
association. The Bank formed CNB Insurance Services, Inc., a wholly owned
subsidiary, which was a property and casualty insurance agency selling primarily
personal lines of insurance. On June 1, 2006, the Bank sold the assets of CNB
Insurance Services, Inc. to Maiden Financial. See Note 16: Discontinued
Operations in the Notes to Consolidated Financial Statements for further
discussion.

EMPLOYEES

     As of December 31, 2006 and 2005, CNB employed 100 and 107 full-time
equivalent employees, respectively.

BUSINESS OF CNB FINANCIAL SERVICES, INC. AND CNB BANK, INC.

     The Company's primary function is to direct, plan and coordinate the
business activities of the Bank and its subsidiary.

     CNB Bank, Inc. is a full-service commercial bank conducting general banking
and trust activities through six full-service offices and six automated teller
machines located in Morgan and Berkeley Counties, West Virginia and Washington
County, Maryland. The Bank exercised an option in December 2003 to purchase a
parcel of land in Falling Waters, Berkeley County, West Virginia. Construction
on an additional full-service branch began August 2004 and was completed in
April 2005.

     On January 26, 2004, CNB entered into an agreement to purchase certain
assets and liabilities associated with the Hancock Branch of Fidelity Bank, a
subsidiary bank of Mercantile Bankshares Corporation (formerly Home Federal).
The purchase, which took place on June 11, 2004, increased the assets and
liabilities of CNB by $14.6 million. CNB assumed responsibility for all the
deposit services including checking, savings and certificates of deposit.
Additionally, CNB acquired loans, equipment and leasehold improvements and
assumed the lease for the real estate located at 333 East Main Street, Hancock,
Maryland.

     CNB Bank, Inc. accepts time, demand and savings deposits including NOW
accounts, regular savings accounts, money market accounts, fixed-rate
certificates of deposit and club accounts. In addition, the Bank provides safe
deposit box rentals, wire transfer services and 24-hour ATM services through a
regional network known as STAR. STAR is a participant in the nationwide Cirrus
network.

     The Bank offers a full spectrum of lending services to its customers,
including commercial loans and lines of credit, residential real estate loans,
consumer installment loans and other personal loans. Commercial loans are
generally secured by various collateral, including commercial real estate,
accounts receivable and business machinery and equipment. Residential real
estate loans consist primarily of mortgages on the borrower's personal
residence, and are typically secured by a first lien on the subject property.
Consumer and personal loans are generally secured, often by first liens on
automobiles, consumer goods or depository accounts. A special effort is made to
keep loan products as flexible as possible within the guidelines of prudent
banking practices in terms of interest rate risk and credit risk. Bank lending
personnel adhere to established lending limits and authorities based on each
individual's lending expertise and experience.

     The Bank's trust department acts as trustee under trusts and wills, as
executor of wills and administrator of estates, as guardian for estates of
minors and incompetents and serves in various corporate trust capacities.


                                        4

<PAGE>

COMPETITION

     CNB Bank, Inc. faces a high degree of competition for all its services from
local banks. Within its market area of Morgan and Berkeley Counties in West
Virginia and Washington County in Maryland, numerous competing commercial banks
exist.

     Nonbank competition has also increased in recent years locally by the
establishment of finance and mortgage companies and the expansion of insurance
operations and credit unions, as well as from mutual funds located throughout
the country.

     West Virginia banks are allowed unlimited branch banking throughout the
State. The Interstate Banking and Branch Efficiency Act of 1994 also authorizes
interstate branching by acquisition and consolidation nationwide. These and
similar provisions impacting both the banking and thrift industries may serve to
intensify future competition within the Bank's market.

AVAILABLE INFORMATION

     Our Internet address is www.cnbwv.com. The SEC maintains an Internet
website at http://www.sec.gov that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC, and our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available,
free of charge, as soon as reasonably practicable after we electronically file
such material with, or furnish it to, the SEC. In addition, any document filed
by the company with the SEC can be read and copied at the SEC's public reference
facilities at 100 F Street, NE, Washington, DC 20549. The public may obtain
information on the operation of the public reference room by calling the SEC at
1-800-SEC-0330. Copies of documents can also be obtained free of charge by any
shareholder by writing to Rebecca S. Stotler, VP/CFO, CNB Financial Services,
Inc., 101 S. Washington Street, Berkeley Springs, WV 25411.

SUPERVISION AND REGULATION

     The following is a summary of certain statutes and regulations affecting
the Company and its subsidiaries and is qualified in its entirety by reference
to such statutes and regulations:

          BANK HOLDING COMPANY REGULATION. The Company is a bank holding company
under the Bank Holding Company Act of 1956 ("BHCA"), which restricts the
activities of the Company and any acquisition by the Company of voting stock or
assets of any bank, savings association or other company. The Company is subject
to the reporting requirements of, and examination and regulation by, the Federal
Reserve Board. The Company's subsidiary bank is subject to restrictions imposed
by the Federal Reserve Act on transactions with affiliates, including any loans
or extensions of credit to the Company or its subsidiaries, investments in the
stock or other securities thereof and the taking of such stock or securities as
collateral for loans to any borrower; the issuance of guarantees, acceptances or
letters of credit on behalf of the Company and its subsidiaries; purchases or
sales of securities or other assets; and the payment of money or furnishing of
services to the Company and other subsidiaries. The Bank is prohibited from
acquiring direct or indirect control of more than 5% of any class of voting
stock or substantially all of the assets of any bank holding company without the
prior approval of the Federal Reserve Board. The Company and its subsidiaries
are prohibited from engaging in certain tying arrangements in connection with
extensions of credit and/or the provision of other property or services to a
customer by the Company or its subsidiaries.

          On July 30, 2002, the Senate and the House of Representatives of the
United State (Congress) enacted the Sarbanes-Oxley Act of 2002, a law that
addresses, among other issues, corporate governance, auditing and accounting,
executive compensation, and enhanced and timely disclosure of corporate
information. The New York Stock Exchange proposed corporate governance rules
that were enacted by the Securities and Exchange Commission. The changes are
intended to allow stockholders to more easily and efficiently monitor the
performance of companies and directors.

          Effective August 29, 2002, as directed by Section 302(a) of
Sarbanes-Oxley, the Bank's chief executive officer and chief financial officer
are each required to certify that CNB's Quarterly and Annual Reports do not
contain any untrue statement of a material fact. The rules have several
requirements, including having these officers certify that: they are responsible
for establishing, maintaining, and regularly evaluating the effectiveness of
CNB's internal controls; they have made certain disclosures to CNB's auditors
and the audit committee of the Board of Directors about CNB's internal controls;
and they have included information in CNB's Quarterly and Annual Reports about
their evaluation and whether there have been significant changes in CNB's
internal controls or in other factors that could significantly affect internal
controls subsequent to the evaluation. Effective in 2008, the audit requirements
related to internal controls contained in Section 404 of Sarbanes-Oxley will
become applicable to CNB.

          The BHCA also permits the Company to purchase or redeem its own
securities. However, Regulation Y provides that prior notice must be given to
the Federal Reserve Board if the gross consideration for such purchase or
consideration, when aggregated with the net consideration paid by the Company
for all such purchases or redemptions during the preceding 12 months, is equal
to 10 percent or more of the Company's consolidated net worth. Prior notice is
not required if (i) both before and immediately after the redemption, the bank
holding company is well-capitalized; (ii) the financial holding company is
well-managed and (iii) the bank holding company is not the subject of any
unresolved supervisory issues.

          The Gramm-Leach-Bliley Act (also known as the Financial Services
Modernization Act of 1999) permits bank holding companies to become financial
holding companies. This allows them to affiliate with securities firms and
insurance companies and to engage


                                        5

<PAGE>

in other activities that are financial in nature. A bank holding company may
become a financial holding company if each of its subsidiary banks is well
capitalized, is well managed and has at least a satisfactory rating under the
Community Reinvestment Act. No regulatory approval will be required for a
financial holding company to acquire a company, other than a bank or savings
association, engaged in activities that are financial in nature or incidental to
activities that are financial in nature, as determined by the Federal Reserve
Board.

          The Financial Services Modernization Act defines "financial in nature"
to include: securities underwriting, dealing and market making; sponsoring
mutual funds and investment companies; insurance underwriting and agency;
merchant banking activities; and activities that the Federal Reserve Board has
determined to be closely related to banking. A bank also may engage, subject to
limitations on investment, in activities that are financial in nature, other
than insurance underwriting, insurance company portfolio investment, real estate
development and real estate investment, through a financial subsidiary of the
bank, if the bank is well capitalized, well managed and has at least a
satisfactory Community Reinvestment Act rating.

          BANK SUBSIDIARY REGULATION. The Bank converted from a national bank to
a state bank in 2006 and is regulated by the West Virginia Division of Banking
and the Federal Deposit Insurance Corporation. The Bank is also subject to
supervision, examination and regulation by the Federal Reserve System, and as
such is subject to applicable provisions of the Federal Reserve Act and
regulations issued there under.

          The deposits of the Bank are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the extent provided by law. Accordingly, the Bank is
also subject to regulation by the FDIC. The FDIC may terminate a bank's deposit
insurance upon finding that the institution has engaged in unsafe or unsound
practices, is in an unsafe or unsound condition to continue operations, or has
violated any applicable law, regulation, rule, order or condition enacted or
imposed by the bank's regulatory agency.

          The Bank is a member of the Federal Home Loan Bank of Pittsburgh. The
FHLB provided credit to its member in the form of advances. As a member of the
FHLB of Pittsburgh, the bank must maintain an investment in the capital stock of
that FHLB in an amount equal to the greater of 1% of the aggregate outstanding
principal amount of its respective residential mortgage loans, home purchase
contracts and similar obligations at the beginning of each year or 5% of its
advances from the FHLB.

CAPITAL REQUIREMENTS

          As a bank holding company, the Company is subject to Federal Reserve
Board risk-based capital guidelines. The guidelines establish a systematic
framework that makes regulatory capital requirements more sensitive to
differences in risk profiles among banking organizations, takes off-balance
sheet exposures into account and minimizes disincentives to holding liquid,
low-risk assets. Under the guidelines, bank holding companies must maintain
capital sufficient to meet both a risk-based asset ratio test and leverage ratio
test on a consolidated basis. The risk-based ratio is determined by allocating
assets and specified off-balance-sheet commitments into four weighted
categories, with higher levels of capital being required for categories
perceived as representing greater risk. The Bank is subject to substantially
similar capital requirements adopted by its applicable regulatory agencies. In
addition, the Federal Deposit Insurance Corporation Improvement Act of 1991
("FDICIA") established a regulatory framework which ties the level of
supervisory intervention by bank regulatory authorities primarily to a
depository institution's capital category. Among other things, FDICIA authorized
regulatory authorities to take "prompt corrective action" with respect to
depository institutions that do not meet minimum capital requirements. FDICIA
established five capital tiers: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. The Company is well capitalized as detailed in Note 20:
Regulatory Matters in the Notes to Consolidated Financial Statements.

FEDERAL AND STATE LAWS

          The Bank is subject to regulatory oversight under various consumer
protection and fair lending laws. These laws govern, among other things,
truth-in-lending disclosure, equal credit opportunity, fair credit reporting and
community reinvestment. Failure to abide by federal laws and regulations
governing community reinvestment could limit the ability of a bank to open a new
branch or engage in a merger transaction. Community reinvestment regulations
evaluate how well and to what extent a bank lends and invests in its designated
service area, with particular emphasis on low-to-moderate income communities and
borrowers in such areas.

MONETARY POLICY AND ECONOMIC CONDITIONS

          The business of financial institutions is affected not only by general
economic conditions, but also by the policies of various governmental regulatory
agencies, including the Federal Reserve Board. The Federal Reserve Board
regulates money and credit conditions and interest rates to influence general
economic conditions primarily through open market operations in U.S. government
securities, changes in the discount rate on bank borrowings and changes in the
reserve requirements against depository institutions' deposits. These policies
and regulations significantly affect the overall growth and distribution of
loans, investments and deposits, and the interest rates charged on loans, as
well as the interest rates paid on deposits and accounts.

          The monetary policies of the Federal Reserve Board have had a
significant effect on the operating results of financial institutions in the
past and are expected to continue to have significant effects in the future. In
view of the changing conditions in the economy and the money markets and the
activities of monetary and fiscal authorities, the Company cannot definitely
predict future changes in interest rates, credit availability or deposit levels.


                                        6

<PAGE>

EFFECT OF ENVIRONMENTAL REGULATION

          The Bank's primary exposure to environmental risk is through its
lending activities. In cases when management believes environmental risk
potentially exists, the Bank mitigates its environmental risk exposures by
requiring environmental site assessments at the time of loan origination to
confirm collateral quality as to commercial real estate parcels posing higher
than normal potential for environmental impact, as determined by reference to
present and past uses of the subject property and adjacent sites. Environmental
assessments are typically required prior to any foreclosure activity involving
non-residential real estate collateral.

          With regard to residential real estate lending, management reviews
those loans with inherent environmental risk on an individual basis and makes
decisions based on the dollar amount of the loan and the materiality of the
specific credit.

          The Company anticipates no material effect on anticipated capital
expenditures, earnings or competitive position as a result of compliance with
federal, state or local environmental protection laws or regulations.

INTERNATIONAL MONEY LAUNDERING ABATEMENT AND ANTI-TERRORIST FINANCING ACT OF
2001 (U.S. PATRIOT ACT)

          The International Money Laundering Abatement and Anti-Terrorist
Financing Act of 2001 (the "Patriot Act") was adopted in response to the
September 11, 2001 terrorist attacks. The Patriot Act provides law enforcement
with greater powers to investigate terrorism and prevent future terrorist acts.
Among the broad-reaching provisions contained in the Patriot Act are several
designed to deter terrorists' ability to launder money in the United States and
provide law enforcement with additional powers to investigate how terrorists and
terrorist organizations are financed. The Patriot Act creates additional
requirements for banks, which were already subject to similar regulations. The
Patriot Act authorizes the Secretary of the Treasury to require financial
institutions to take certain "special measures" when the Secretary suspects that
certain transactions or accounts are related to money laundering. These special
measures may be ordered when the Secretary suspects that a jurisdiction outside
of the United States, a financial institution operating outside of the United
States, a class of transactions involving a jurisdiction outside of the United
States or certain types of accounts are of "primary money laundering concern."
The special measures include the following: (a) require financial institutions
to keep records and report on the transactions or accounts at issue; (b) require
financial institutions to obtain and retain information related to the
beneficial ownership of any account opened or maintained by foreign persons; (c)
require financial institutions to identify each customer who is permitted to use
a payable-through or correspondent account and obtain certain information from
each customer permitted to use the account; and (d) prohibit or impose
conditions on the opening or maintaining of correspondent or payable-through
accounts.

CRITICAL ACCOUNTING POLICIES

     CNB's financial position and results of operations are impacted by
management's application of accounting policies involving judgments made to
arrive at the carrying value of certain assets. Management's greatest challenge
in implementing its policies is the need to make estimates about the effect of
matters that are inherently less than certain. For a detailed discussion of
CNB's significant accounting policies, see Note 1: Summary of Significant
Accounting Policies in the Notes to Consolidated Financial Statements. A
material estimate that is susceptible to significant change is the determination
of the allowance for loan losses. Both the estimates of the amount of the
allowance for loan losses and the placement of loans on non-accrual status
affect the carrying amount of the loan portfolio and accrued interest
receivable.

     The allowance for loan losses is a subjective judgment that management must
make regarding the loan portfolio, and is established and maintained at levels
that management believes are adequate to cover losses resulting from the
inability of borrowers to make required payments on loans. Where there is a
question as to the impairment of a specific loan, management obtains valuations
of the property or collateral securing the loan, and current financial
information of the borrower, including financial statements, when available.
Since the calculation of appropriate loan loss allowances relies on management's
estimates and judgments relating to inherently uncertain events, actual results
may differ from these estimates. For a more detailed discussion on the allowance
for loan losses, see Nonperforming Loans and Allowance For Loan Losses in this
Management's Discussion and Analysis and Allowance for Loan Losses in Note 1:
Summary of Significant Accounting Policies and Note 4: Loans and Leases
Receivable in the Notes to Consolidated Financial Statements.

ITEM 1A. RISK FACTORS

     This report contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below, as well as
those discussed elsewhere in this report.

THE BANKING BUSINESS IS VERY COMPETITIVE.

     The banking business is generally a highly competitive business. Our total
assets have grown from approximately $191.6 million at December 31, 2002, to
$276.1 million at December 31, 2006. Our business plan calls for continued
growth. Our ability to continue to grow depends, in part, upon our ability to
successfully attract deposits and identify favorable loan and investment
opportunities. In the event that we do not continue to grow, our results of
operations could be adversely impacted.


                                        7

<PAGE>

     Our ability to grow successfully will depend on whether we can continue to
fund this growth while maintaining cost controls and asset quality, as well as
on factors beyond our control, such as national and regional economic conditions
and interest rate trends. If we are not able to control costs and maintain asset
quality, such growth could adversely impact our earnings and financial
condition.

     As of June 30, 2006, based on an FDIC analysis done as of June 30 each
year, there were eleven other banks in CNB's market area. The total Morgan
County commercial bank deposits, which include a total of five banking offices,
as of June 30, 2006, were in excess of $218.5 million. The total Berkeley County
commercial bank deposits, which include a total of twenty nine banking offices,
as of June 30, 2006, were in excess of $989.8 million. The total Hancock,
Maryland commercial bank deposits, which include three banking offices, as of
June 30, 2006, were in excess of $84.6 million. At this same date CNB had a
73.2% share of the Morgan County commercial bank deposits, a 5.6% share of the
Berkeley County commercial bank deposits and a 25.3% share of the Hancock,
Maryland commercial bank deposits. CNB represents Morgan County's only locally
owned bank, as the other existing commercial banks have their parent-Bank
headquarters in Charleston, West Virginia (City National) and Charlotte, North
Carolina (BB&T).

     For most of the services which CNB provides, there is also competition from
financial institutions other than commercial banks in attracting deposits and in
making loans with local offices and those that do business over the internet. We
compete for loans principally through the interest rates and loan fees we charge
and the efficiency and quality of services we provide. Increasing levels of
competition in our banking and financial services businesses may reduce our
market share or cause the prices we charge for our services to fall. Our results
may differ in future periods depending upon the nature or level of competition.
In addition, some traditional banking services or competing services are offered
by insurance companies, investment counseling firms and other business firms and
individuals. Many of CNB's competitors have significantly greater financial and
marketing resources than we have.

     The existence of larger financial institutions in Morgan and Berkeley
Counties, West Virginia and Washington County, Maryland, some of which are owned
by larger regional or national companies, influence the competition in CNB's
market area. The principal competitive factors in the market for deposits and
loans are interest rates, either paid on deposits or charged on loans. West
Virginia law allows statewide branch banking which provides increased
opportunities for CNB, but it also increases the potential competition for our
service area. In addition, in 1994, Congress passed the Riegle-Neal Interstate
Banking and Branching Efficiency Act. Under this Act, absent contrary action by
a state's legislature, interstate branch banking was allowed to occur after June
1, 1997. States are permitted to elect to participate to a variety of degrees in
interstate banking or states may elect to "opt out." In 1996, the West Virginia
Legislature elected to "opt in." Accordingly, out-of-state banks may form de
novo banks or may acquire existing branches of West Virginia banks on a
reciprocal basis.

IN THE FUTURE, CNB'S LENDING LIMIT COULD CREATE A COMPETITIVE DISADVANTAGE.

     In the future, CNB may not be able to attract larger volume customers
because the size of loans that CNB can offer to potential customers is less than
the size of the loans that many of CNB's larger competitors can offer.
Accordingly, CNB may lose customers seeking large loans to mortgage companies,
larger commercial banks and other financial institutions. We anticipate that our
lending limit will continue to increase proportionately with CNB's growth in
earnings; however, CNB may not be able to successfully attract or maintain
larger customers.

CNB ENGAGES IN COMMERCIAL AND CONSUMER LENDING ACTIVITIES WHICH ARE RISKIER THAN
RESIDENTIAL REAL ESTATE LENDING.

     CNB makes loans that involve a greater degree of risk than loans involving
residential real estate lending. Commercial business loans may involve greater
risks than other types of lending because they are often made based on varying
forms of collateral, and repayment of these loans often depends on the success
of the commercial venture. Consumer loans may involve greater risk because
adverse changes in borrowers' incomes and employment after funding of the loans
may impact their abilities to repay the loans.

     CNB's loan portfolio at December 31, 2006, consists of the following:

<TABLE>
<CAPTION>
TYPE OF LOAN                                        PERCENTAGE OF PORTFOLIO
------------                                        -----------------------
<S>                                                 <C>
Residential Real Estate Loans                                 70%
Commercial Loans, principally real estate secured             22%
Consumer Loans                                                 8%
</TABLE>

CNB HAS LIMITED CONTROL OVER ITS PROFITABILITY BECAUSE CNB CANNOT CONTROL THE
VARIOUS FACTORS THAT CAN CAUSE FLUCTUATIONS IN INTEREST RATES.

     Aside from credit risk, the most significant risk resulting from CNB's
normal course of business, extending loans and accepting deposits, is interest
rate risk. If market interest rate fluctuations cause CNB's cost of funds to
increase faster than the yield of its interest-earning assets, then its net
interest income will be reduced. CNB's results of operations depend to a large
extent on the level of net interest income, which is the difference between
income from interest-earning assets, such as loans and investment securities,
and interest expense on interest-bearing liabilities, such as deposits and
borrowings. Interest rates are highly sensitive to many factors that are beyond
CNB's control, including general economic conditions and the policies of various
governmental and regulatory authorities. In establishing interest rates on


                                        8

<PAGE>

deposit accounts, CNB considers various factors, including rates offered by
competing institutions in their local market. In doing so, CNB does not try to
offer the highest rates in their local market which may result in a loss of
deposits in other institutions offering marginally higher rates.

     To effectively monitor the interest rate risk discussed above, CNB uses a
computer model to project the change in net interest income under various
changes in interest rates. To provide guidance to management, CNB's board of
directors, through its Asset/Liability/Investment Committee, has established a
policy related thereto which includes interest rate risk parameters within which
to operate. As of December 31, 2006, CNB's interest rate risk is within the
parameters.

CNB'S SUCCESS DEPENDS ON CNB'S MANAGEMENT TEAM.

     The departure of one or more of CNB's officers or other key personnel could
adversely affect CNB's operations and financial position. The Company's
management makes most decisions that involve CNB's operations. The key personnel
have all been with CNB since 2001. They include Thomas F. Rokisky, Patricia C.
Muldoon and Rebecca S, Stotler.

AN ECONOMIC SLOWDOWN IN OUR MARKET AREA COULD HURT CNB'S BUSINESS.

     Because we focus our business in the Eastern Panhandle of West Virginia and
the western part of Maryland, an economic slowdown in these areas could hurt our
business. An economic slowdown could have the following consequences:

     -    Loan delinquencies may increase;

     -    Problem assets and foreclosures may increase;

     -    Demand for the products and services of CNB may decline; and

     -    Collateral (including real estate) for loans made by CNB may decline
          in value, in turn reducing customers' borrowing power and making
          existing loans less secure.

CNB IS HIGHLY REGULATED.

     The operations of CNB are subject to extensive regulation by federal, state
and local governmental authorities and are subject to various laws and judicial
and administrative decisions imposing requirements and restrictions on them.
Policies adopted or required by these governmental authorities can affect CNB's
business operations and the availability, growth and distribution of CNB's
investments, borrowings and deposits.

CNB MAY INCUR INCREASED CHARGE-OFFS AND ADDITIONAL LOAN LOSS PROVISION DUE TO
NEGATIVE CREDIT IN THE FUTURE.

     In the future, CNB could experience negative credit quality trends that
could head to a deterioration of asset quality. Such deterioration could require
CNB to incur loan charge-offs in the future and incur additional loan loss
provision, both of which would have the effect of decreasing earnings.

MARKETABILITY OF COMMON STOCK.

     There is no active market for our outstanding shares, and it is unlikely
that an established market for our shares will develop in the near future. We
presently do not intend to seek listing of the shares on any securities
exchange, or quotation on the Nasdaq interdealer quotation system. It is not
known whether significant trading activity will take place for several years, if
at all. Accordingly, a shareholder may not be able to sell their shares
immediately upon offering them for sale.

ITEM 2. PROPERTIES

CNB Financial Services, Inc.

     CNB's headquarters are located at the main office of CNB Bank, Inc. located
at 101 South Washington Street, Berkeley Springs, West Virginia.

CNB Bank, Inc.

     The principal executive office and main banking office is located at 101
South Washington Street, Berkeley Springs, West Virginia. In addition, the bank
has owned and operated a full service branch bank located at 2450 Valley Road,
Berkeley Springs, West Virginia since 1991. In October 1998, the bank opened a
full service branch located at 2646 Hedgesville Road, Martinsburg, West
Virginia. In March 2002, the bank opened a full service branch located at 14994
Apple Harvest Drive, Martinsburg, West Virginia. In April 2005, the bank opened
an additional full service branch located at 1231 T.J. Jackson Drive, Falling
Waters, West Virginia. On January 26, 2004, CNB entered into an agreement to
purchase certain assets and liabilities associated with the Hancock Branch of
Fidelity Bank, a subsidiary bank of Mercantile Bankshares Corporation (formerly
Home Federal). The purchase, which took place on June 11, 2004, increased the
assets and liabilities of


                                        9

<PAGE>

CNB by $14.6 million. CNB assumed responsibility for all the deposit services
including checking, savings and certificate of deposits. Additionally, CNB
acquired loans, equipment and leasehold improvements and assumed the lease for
the real estate located at 333 East Main Street, Hancock, Maryland. Each of the
bank's locations provides ATM services, in addition to traditional lobby and
drive-in services. In November of 1998, the bank acquired CNB Insurance
Services, Inc. which was operated out of the main office in Berkeley Springs
until June 1, 2006 at which time the Bank sold the assets of CNB Insurance
Services, Inc. to Maiden Financial. The main office and branches are owned free
and clear of any indebtedness. The Bank owns all of the facilities described
above with the exception of the Hancock, Maryland branch on which the bank owns
improvements situated on leased land. Management believes that the facilities
are of sound construction, in good operating condition, are appropriately
insured and are adequately equipped for carrying on the business of the Company.
The net book value of the bank's premises and equipment as of December 31, 2006
is $6.3 million.

ITEM 3. LEGAL PROCEEDINGS

     In the ordinary course of business, the Bank and its subsidiary are
involved in various legal proceedings.

     In the opinion of the management of CNB, there are no proceedings pending
to which CNB is a party or to which its property is subject, which, if
determined adversely to CNB, would be material in relation to CNB's financial
condition. There are no proceedings pending other than ordinary routine
litigation incident to the business of CNB. In addition, no material proceedings
are pending or are known to be threatened or contemplated against CNB by
government authorities.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the fourth quarter of 2006.


                                       10
<PAGE>

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
     ISSUER PURCHASES OF EQUITY SECURITIES

     The stock of CNB Financial Services, Inc., and prior to the formation of
CNB, the Bank, is not listed on an exchange and is not heavily traded. The
trades that have occurred are those that, to management's knowledge, have been
individually arranged. The prices listed below are based upon information
available to management through discussions with shareholders, and to the best
of management's knowledge, accurately represent the amount at which its stock
was traded during the periods indicated. Prices reflect amounts paid by
purchasers of the stock and, therefore, may include commissions or fees. The
amounts of such commissions or fees, if any, are not known to management. No
attempt was made by management to ascertain the prices for every sale made
during these periods.

Based on information that management is aware of, the majority of shares sold
during 2006 were at a price that ranged from $67 to $80 per share. During 2005,
information available to management indicates that stock trades ranged from $67
to $100 per share. Book value per share increased from $41.50 at December 31,
2005 to $44.37 at December 31, 2006.

     Dividends which have been declared by the Board of Directors semiannually,
increased from $1.44 per share in 2005 to $1.54 per share in 2006, a 6.9%
increase. The ability of CNB to pay dividends is subject to certain limitations
imposed by various banking regulations. See Note 20: Regulatory Matters in the
Notes to Consolidated Financial Statements for a more detailed discussion on the
limitations. As of March 2, 2007, the number of record holders was 639.

     The prices listed below represent the high and low market prices for stock
trades reported during each quarter.

<TABLE>
<CAPTION>
                                    PER SHARE
                  HIGH       LOW     DIVIDEND
                 -------   ------   ---------
<S>              <C>       <C>      <C>
2006
First quarter    $ 80.00   $67.00
Second quarter   $ 80.00   $78.00     $0.45
Third quarter    $ 73.00   $71.00
Fourth quarter   $ 73.00   $73.00     $1.09

2005
First quarter    $ 68.00   $68.00
Second quarter   $ 67.00   $67.00     $0.42
Third quarter    $100.00   $67.00
Fourth quarter   $ 90.00   $67.00     $1.02
</TABLE>

     CNB's stock is not traded on an established exchange and there are no known
market makers, therefore there is no established public trading market for CNB's
stock. The prices listed above are based upon information available to
management through discussions with shareholders, and to the best of
management's knowledge, accurately represent the amount at which its stock was
traded during the periods indicated. Prices reflect amounts paid by purchasers
of the stock and, therefore, may include commissions or fees. The amounts of
such commissions or fees, if any, are not known to management. No attempt was
made by management to ascertain the prices for every sale made during these
periods.

     During the fourth quarter of the fiscal year, CNB did not purchase any of
its own common stock.

     The following graph compares the yearly percentage change in CNB's
cumulative total shareholder return on common stock for the five-year period
ending December 31, 2006, with the cumulative total return of the Hemscott Index
(SIC Code Index 6022-State Commercial Banks). Shareholders may obtain a copy of
the index by calling Hemscott, Inc., at telephone number (804) 775-8118. There
is no assurance that CNB's stock performance will continue in the future with
the same or similar trends as depicted in the graph.


                                       11

<PAGE>

                        COMPARE CUMULATIVE TOTAL RETURN
                      AMONG CNB FINANCIAL SERVICES, INC.,
                       HEMSCOTT INDEX AND SIC CODE INDEX

<TABLE>
<CAPTION>
                                                    FISCAL YEAR ENDING
                         ---------------------------------------------------------------------------
COMPANY/INDEX/MARKET     12/31/2001   12/31/2002   12/31/2003   12/31/2004   12/30/2005   12/29/2006
--------------------     ----------   ----------   ----------   ----------   ----------   ----------
<S>                      <C>          <C>          <C>          <C>          <C>          <C>
CNB Financial              100.00       112.17       147.19       148.08       179.28       199.29
State Commercial Banks     100.00        93.67       122.15       132.84       130.62       148.64
Hemscott Index             100.00        79.43       105.75       118.62       127.02       147.03
</TABLE>

                     ASSUMES $100 INVESTED ON DEC. 31, 2001
                          ASSUMES DIVIDEND REINVESTED
                        FISCAL YEAR ENDING DEC. 31, 2006

SIC Code Index is SIC 6022 State Commercial Banks

Hemscott Index is Hemscott Financial Information Composite Market Value Index

     The information used to determine CNB's cumulative total shareholder return
on its common stock is based upon information furnished to CNB or the bank by
one or more parties involved in purchases or sales of CNB's common stock. There
is no public market for CNB's common stock, and share prices used to determine
CNB's cumulative shareholder return are based upon sporadic trading activity in
privately negotiated transactions. We have not attempted to verify or determine
the accuracy of the representations made to CNB or the bank.


                                       12
<PAGE>

ITEM 6. SELECTED FINANCIAL DATA

TABLE 1. FIVE YEAR SELECTED CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
                                      2006       2005       2004       2003       2002
                                    --------   --------   --------   --------   --------
                                           In thousands except for per share data
<S>                                 <C>        <C>        <C>        <C>        <C>
AT YEAR-END
   Total assets                     $276,069   $258,953   $236,998   $201,056   $191,602
   Securities available for sale      50,873     55,194     59,740     39,362     43,430
   Loans and lease, net of
      unearned income                204,319    180,207    154,920    146,273    129,815
   Deposits                          233,083    219,288    207,729    180,899    173,063
   Shareholders' equity               20,322     19,008     18,149     16,569     16,270

SIGNIFICANT RATIOS
   Return on average assets             0.92%      1.00%      1.07%      0.89%      0.71%
   Return on average
      shareholders' equity             12.46      12.91      13.38      10.44       8.38
   Average shareholders' equity
      to average assets                 7.35       7.76       8.03       8.48       8.49
   Net interest margin                  3.77       4.12       4.11       3.83       3.36

SUMMARY OF OPERATIONS
   Interest income                  $ 15,989   $ 13,420   $ 11,715   $ 11,569   $ 11,489
   Interest expense                    6,269      3,850      3,169      4,152      5,342
   Net interest income                 9,720      9,570      8,546      7,417      6,147
   Provision for loan losses             275        352        393        312        261
   Net interest income after
      provision for loan losses        9,445      9,218      8,153      7,105      5,886
   Non-interest income                 2,222      2,007      1,972      1,728      1,403
   Non-interest expense                7,890      7,541      6,789      6,007      5,300
   Income before income taxes and
      discontinued operations          3,653      3,684      3,336      2,826      1,989
   Discontinued operations               124         --         --         --         --
   Income tax expense                  1,308      1,238        992      1,083        681
   Net income                          2,469      2,446      2,344      1,743      1,308

PER SHARE DATA
   Net income                       $   5.39   $   5.34   $   5.12   $   3.80   $   2.86
   Cash dividends                       1.54       1.44       1.38       1.20       1.02
   Net book value                      44.37      41.50      39.62      36.17      35.52
</TABLE>


                                       13

<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion and analysis presents the significant changes in
financial condition and results of operations of CNB, for the years ended
December 31, 2006 and 2005. This discussion and analysis should be read in
conjunction with the audited, consolidated financial statements and accompanying
notes. This discussion includes forward-looking statements based upon
management's expectations; actual results may differ. Amounts and percentages
used in this discussion have been rounded. All average balances are based on
monthly averages.

EARNINGS SUMMARY

     CNB had net income totaling $2.5 million or $5.39 per share, $2.4 million
or $5.34 per share and $2.3 million or $5.12 per share for fiscal years 2006,
2005 and 2004, respectively. Annualized return on average assets and average
equity were .9% and 12.5%, respectively for 2006 compared to 1.0% and 12.9% for
2005 and 1.1% and 13.4% for 2004.

     Growth in net income for the year 2007 is projected to increase slightly
compared to the growth in net income for 2006 over 2005 due to the strong loan
demand the bank experienced in 2005 and 2006 continuing in 2007 offset by a
tighter net interest margin caused by the increased cost of funds. Other
significant factors affecting the 2007 net income are expenses to be incurred
related to the implementation of the Sarbanes-Oxley Act which are expected to be
approximately $200,000. Also, 2006 net income included a $145,000 gain on sale
of assets of CNB Insurance Services, Inc.

NET INTEREST INCOME

     Net interest income represents the primary component of the Bank's
earnings. It is the difference between interest and fee income related to
earning assets and interest expense incurred to carry interest-bearing
liabilities. Net interest income is impacted by changes in the volume and mix of
interest-earning assets and interest-bearing liabilities, as well as by changing
interest rates. In order to manage these changes, their impact on net interest
income and the risk associated with them, the Bank utilizes an ongoing
asset/liability management program. This program includes analysis of the
difference between rate sensitive assets and rate sensitive liabilities,
earnings sensitivity to rate changes, and source and use of funds. A discussion
of net interest income and the factors impacting it is presented below.

     Net interest income in 2006 increased by $150,000 or 1.6% over 2005.
Interest income in 2006 increased by $2.6 million or 19.1% compared to 2005,
while interest expense increased by $2.4 million or 62.8% during 2006 as
compared to 2005. Interest income increased during 2006 compared to 2005 as a
result of an increase in the average balances of loans and investment
securities. Average rates earned on these interest earning assets also increased
during 2006 compared to 2005. Interest expense increased during 2006 compared to
2005 as a result of an increase in the average balance of money market accounts,
time deposit accounts and borrowings and an increase in the average rates paid
on all interest bearing liability accounts except savings deposits. However, the
increase in interest expense was offset by a decrease in the average balance of
savings accounts and NOW accounts.

     Net interest income in 2005 increased by $1.0 million or 12.0% over 2004.
Interest income in 2005 increased by $1.7 million or 14.6% compared to 2004,
while interest expense increased by $681,000 or 21.5% during 2005 as compared to
2004. Interest income increased during 2005 compared to 2004 as a result of an
increase in the average balances of loans and investment securities offset by a
decrease in the average balance of federal funds sold. Average rates earned on
all interest earning assets increased during 2005 compared to 2004. Interest
expense increased during 2005 compared to 2004 as a result of an increase in the
average balance of savings deposits, NOW accounts, money market accounts and
borrowings and an increase in the average rates paid on those accounts. Interest
expense was also affected by an increase in the average rates paid on time
deposits offset by a decrease in the average balance of those accounts.

     During 2006 and 2005, the Bank used funds generated from deposit account
growth, sale of investment securities and FHLB borrowings to fund loan
commitments.

     The net interest margin is impacted by the change in the spread between
yields on earning assets and rates paid on interest bearing liabilities. Net
interest margin decreased from 2005 to 2006. See Table 1 - Distribution of
Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest
Differential.


                                       14

<PAGE>

     TABLE 2. DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
                    INTEREST RATES AND INTEREST DIFFERENTIAL

<TABLE>
<CAPTION>
                                    DECEMBER 31, 2006              DECEMBER 31, 2005              DECEMBER 31, 2004
                              ----------------------------   ----------------------------   ----------------------------
                                 YTD                            YTD                            YTD
                               AVERAGE      YTD     YIELD/    AVERAGE      YTD     YIELD/    AVERAGE      YTD     YIELD/
                               BALANCE   INTEREST    RATE     BALANCE   INTEREST    RATE     BALANCE   INTEREST    RATE
                              --------   --------   ------   --------   --------   ------   --------   --------   ------
                                                                   In thousands
<S>                           <C>        <C>        <C>      <C>        <C>        <C>      <C>        <C>        <C>
Interest earning assets:
   Federal funds sold         $     27    $     1    4.87%   $     28    $     1    3.11%   $  2,384    $    33    1.25%
   Securities:
      Taxable                   44,674      2,116    4.74      43,245      1,898    4.39      37,526      1,570    4.18
      Tax-exempt (1)            11,298        390    5.23      12,092        410    5.14       8,070        273    5.13
   Loans (net of unearned
      interest) (2) (4) (5)    194,712     13,211    6.78     170,158     10,826    6.36     152,984      9,559    6.25
                              --------    -------    ----    --------    -------    ----    --------    -------    ----
Total interest
   earning assets (1)         $250,711    $15,718    6.27%   $225,523    $13,135    5.82%   $200,964    $11,435    5.69%
                              ========    =======    ====    ========    =======    ====    ========    =======    ====
Nonearning assets:
   Cash and due
      from banks              $  9,170                       $  9,577                       $  9,459
   Bank premises and
      equipment, net             6,464                          6,455                          5,494
   Other assets                  5,521                          4,635                          3,880
   Allowance for
      loan losses               (2,136)                        (1,956)                        (1,731)
                              --------                       --------                       --------
Total assets                  $269,730                       $244,234                       $218,066
                              ========                       ========                       ========
Interest bearing
   liabilities:
   Savings deposits           $ 30,586    $   153    0.50%   $ 32,340    $   162    0.50%   $ 28,622    $   147    0.51%
   Time deposits                99,950      3,791    3.79      87,977      2,391    2.72      92,959      2,493    2.68
   NOW accounts                 42,720      1,189    2.78      43,790        908    2.07      32,196        436    1.35
   Money market
      accounts                  10,905        158    1.45      10,101         91    0.90       9,685         79    0.82
   Borrowings                   18,751        978    5.22       8,393        298    3.55         873         14    1.60
                              --------    -------    ----    --------    -------    ----    --------    -------    ----
Total interest
   bearing liabilities        $202,912    $ 6,269    3.09%   $182,601    $ 3,850    2.11%   $164,335    $ 3,169    1.93%
                              --------    -------    ----    --------    -------    ----    --------    -------    ----
Noninterest bearing
   liabilities:
   Demand deposits            $ 43,795                       $ 40,314                       $ 33,931
   Other liabilities             3,207                          2,368                          2,287
   Shareholders' equity         19,816                         18,951                         17,513
                              --------                       --------                       --------
Total liabilities and
   shareholders' equity       $269,730                       $244,234                       $218,066
                              ========                       ========                       ========
                                          -------                        -------                        -------
Net interest income (1)                   $ 9,449                        $ 9,285                        $ 8,266
                                          =======                        =======                        =======
Net interest spread (3)                              3.18%                          3.71%                          3.76%
                                                     ====                           ====                           ====
Net interest income to
   average interest earning
   assets (1)                                        3.77%                          4.12%                          4.11%
                                                     ====                           ====                           ====
</TABLE>

(1)  Yields are expressed on a tax equivalent basis using a 34% tax rate.

(2)  For the purpose of these computations, nonaccruing loans are included in
     the amounts of average loans outstanding.

(3)  Net interest spread is the difference between the weighted average yield on
     interest-earning assets and the weighted average cost of interest-bearing
     liabilities.

(4)  Interest income on loans excludes fees of $271,000 in 2006, $285,000 in
     2005 and $280,000 in 2004.

(5)  Interest income on loans includes fees of $99,722 in 2006, $68,484 in 2005
     and $100,527 in 2004 from the Business Manager Program, student loans and
     lease receivables.


                                       15
<PAGE>

     Table 3 sets forth a summary of the changes in interest earned and interest
expense detailing the amounts attributable to (i) changes in volume (change in
average volume times the prior year's average rate), (ii) changes in rate
(change in the average rate times the prior year's average volume). The changes
in rate/volume (change in the average volume times the change in the average
rate), had been allocated to the changes in volume and changes in rate in
proportion to the relationship of the absolute dollar amounts of the change in
each. During 2006, net interest income increased $836,000 due to changes in
volume and decreased $672,000 due to changes in interest rates. Also, net
interest income was affected by a $14,000 decrease in loan fees. In 2005, net
interest income increased $1.2 million due to changes in volume and decreased
$193,000 due to changes in interest rates. Also, net interest income was
affected by a $5,000 increase in loan fees.

TABLE 3. VOLUME AND RATE ANALYSIS OF CHANGES IN INTEREST INCOME

<TABLE>
<CAPTION>
                                   2006 OVER 2005            2005 OVER 2004
                             ------------------------   -----------------------
                              CHANGE DUE TO             CHANGE DUE TO
                             ---------------    TOTAL   --------------    TOTAL
(Taxable equivalent basis)   VOLUME    RATE    CHANGE   VOLUME    RATE   CHANGE
                             ------   ------   ------   ------   -----   ------
                                                In thousands
<S>                          <C>      <C>      <C>      <C>      <C>     <C>
Interest earned on:
   Federal funds sold        $   --   $   --   $   --   $   56   $ (84)  $  (28)
   Taxable securities            62      156      218      248      78      326
   Tax-exempt securities        (31)      11      (20)     136       1      137
   Loans                      1,635      750    2,385    1,094     171    1,265
                             ------   ------   ------   ------   -----   ------
Total interest earned        $1,666   $  917   $2,583   $1,534   $ 166   $1,700
                             ------   ------   ------   ------   -----   ------
Interest expense on:
   Savings deposits          $   (9)  $   --   $   (9)  $   19   $  (3)  $   16
   Time deposits                361    1,039    1,400     (136)     38      (98)
   NOW accounts                 (22)     303      281      188     281      469
   Money market accounts          8       59       67        4       8       12
   Other borrowing              492      188      680      247      35      282
                             ------   ------   ------   ------   -----   ------
Total interest expense       $  830   $1,589   $2,419   $  322   $ 359   $  681
                             ------   ------   ------   ------   -----   ------
Net interest income          $  836   $ (672)  $  164   $1,212   $(193)  $1,019
                             ======   ======   ======   ======   =====   ======
</TABLE>

     Another method of analyzing the change in net interest income is to examine
the changes between interest rate spread and the net interest margin on earning
assets. The interest rate spread as shown in Table 4 is the difference between
the average rate earned on earning assets and the average rate on interest
bearing liabilities. The net interest margin takes into account the benefit
derived from assets funded by interest free sources such as non-interest bearing
demand deposits and capital.


                                       16

<PAGE>

TABLE 4. INTEREST RATE SPREAD AND NET INTEREST MARGIN ON EARNING ASSETS

<TABLE>
<CAPTION>
                                     2006              2005              2004
                               ---------------   ---------------   ---------------
                                AVERAGE           AVERAGE           AVERAGE
(Taxable equivalent basis)      BALANCE   RATE    BALANCE   RATE    BALANCE   RATE
                               --------   ----   --------   ----   --------   ----
                                                   In thousands
<S>                            <C>        <C>    <C>        <C>    <C>        <C>
Earning assets                 $250,711   6.27%  $225,523   5.82%  $200,964   5.69%
                               ========          ========          ========
Interest bearing liabilities   $202,912   3.09%  $182,601   2.11%  $164,335   1.93%
                                          ----              ----              ----
Interest rate spread                      3.18%             3.71%             3.76%
Interest free sources used
   to fund earning assets(1)     47,799   0.59%    42,922   0.41%    36,629   0.35%
                               --------   ----   --------   ----   --------   ----
Total sources of funds         $250,711          $225,523          $200,964
                               ========          ========          ========
Net interest margin                       3.77%             4.12%             4.11%
                                          ====              ====              ====
</TABLE>

(1)  Non-interest bearing liabilities and shareholders' equity less non-interest
     earning assets.

     The following discussion analyzes changes in the Bank's spreads and margins
in terms of basis points. A basis point is a unit of measure for interest rates
equal to .01%. One hundred basis points equals 1%.

     Interest rate spread decreased 53 basis points in 2006 and the net interest
margin decreased 35 basis points. The interest rate spread was negatively
impacted by a 98 basis point increase in interest bearing liability costs offset
by a 45 basis point increase in earning asset yields. Interest rate spread
decreased 5 basis points in 2005 while the net interest margin increased 1 basis
point. The interest rate spread was negatively impacted by an 18 basis point
increase in interest bearing liability costs offset by a 13 basis point increase
in earning asset yields.

     The prime rate increased 100 basis points during 2006 and 200 basis points
during 2005, however longer term rates have fluctuated in a relatively narrow
range. For example, the increase in the average ten year Treasury rates
fluctuated within a range of 24 basis points in 2005 and 9 basis points in 2006.
The variable rate loan portfolio is tied to midterm Treasury rates. As a result,
loan yields increased 42 basis points in 2006 and only 11 basis points in 2005.
Interest rates on deposit accounts and other liabilities are tied to the shorter
term rates such as the prime and federal funds rate. Therefore in 2006, the
increase in liability costs of 98 basis points is a direct result of the
increase in short term rates. Generally the rates increased on all interest
bearing liability accounts except savings accounts which stayed level with 2005.
In 2005, the increase in liability costs is primarily the result of the higher
cost of funds on NOW, money market accounts and borrowings during the year.

PROVISION FOR LOAN LOSSES

     The amount charged to the provision for loan losses is based on
Management's evaluation of the loan portfolio. Management determines the
adequacy of the allowance for loan losses based on past loan loss experience,
current economic conditions and composition of the loan portfolio. The allowance
for loan losses is the best estimate by Management of the probable losses which
have been incurred as of the balance sheet date. See Nonperforming Loans and
Allowance for Loan Losses for a comprehensive analysis.

NONINTEREST INCOME

     Noninterest income decreased $19,000 or 1.0% during 2006 over 2005.
Noninterest income increased $35,000 or 1.8% during 2005 over the prior
comparable period. The decrease in 2006 was a direct result of reporting income
for CNB Insurance Services, Inc. in discontinued operations for 2006 offset by
increases in overdraft protection and overdraft fees, ATM and debit card fees
and trust fee income. These increases for 2006 were also offset by a decrease in
income from the title insurance company caused by a decrease in the number of
policies written during the period. The increase in fees related to overdraft
protection and overdraft fees, ATM and debit card fees have a direct correlation
to the increased deposit base of the bank. Also, having a positive impact on
noninterest income for 2006 was an increase in service charge fees effective
October 1, 2006. The increase in noninterest income for 2005 was attributable to
fees generated from the overdraft protection program, debit card income, ATM
fees and trust fees. These increases in 2005 were offset by a decrease in
overdraft fees, travel club fees and miscellaneous customer service fees.

     The level of trust assets being managed increased from $36.9 million at
December 31, 2005 to $39.7 million at December 31, 2006, a 7.6% increase and the
fees earned on these assets increased by $24,000 or 14.0%. The average level of
trust assets being managed increased by $5.8 million or 17.9%.



                                       17
<PAGE>

NONINTEREST EXPENSES

     Noninterest expenses increased $238,000 or 3.2% during 2006 over the prior
comparable period. The expenses related to the discontinued operations of CNB
Insurance Services, Inc. were reclassified out of noninterest expenses for 2006.
In 2005, CNB Insurance Services, Inc. noninterest expenses totaled $132,000 of
which $84,000 was for salaries, $20,000 for benefits and $28,000 was for other
operating expenses. These expenses totaled $73,000 in 2006 and are classified in
discontinued operations. Salaries increased due to normal merit increases and a
full year of salaries for the new Spring Mills branch employees. Additionally in
late January 2006, the Bank increased all hourly salaries to become more in line
with the area competition. Employee benefits increased due to an increase in
pension expense, an increase in health insurance costs and increased salaries.
Additionally in 2006, CNB incurred $24,000 of expenses for a severance package
offered to and accepted by an employee. Although the bank changed its health
insurance program, effective January 1, 2005, to a high deductible plan with
reduced per employee premiums, the insurance expense for 2006 showed an increase
over the same period last year due to the increased number of employees who were
eligible and elected to be in the plan and a normal increase in premiums.

     Occupancy expense increased due to the cost of needed building repairs at a
few of the branch buildings along with the added costs of depreciation and
building supplies for an additional branch facility in Spring Mills, West
Virginia. Furniture and equipment expense showed a decrease for 2006 as compared
to 2005. This decrease was due to a reduction in software amortization expense
due to items related to the computer conversion in 2003 being fully amortized in
February 2006 offset by the additional depreciation for equipment and software
purchased for the new branch facility in Spring Mills and the increased cost and
number of maintenance contracts the bank carries on its equipment.

     The increase in other operating expenses was due to increases in
advertising, stationary, supplies and printing, ATM fees, board fees and legal
fees. During the first quarter of 2006, the bank increased its newspaper and
radio exposure showcasing the Bank's deposit products. This exposure was
significantly reduced during the remainder of 2006. Stationary, supplies and
printing increased due to the printing expenses related to the bank's charter
change from a national bank to a state bank. The ATM expense increase was during
the first quarter and was a direct result of the one time conversion costs for a
new system. Board fees payable to directors increased in April 2006. Legal fees
increased due to expenses related to the bank's charter change. These increases
were offset by decreases in postage, data processing, debit card expense,
outside service fees, teller shortages and miscellaneous NSF and other check
losses. Postage decreased due to the bank's implementation of a new postage
system. Data processing expense decreased due to the start up costs of the
Spring Mills branch in 2005. Debit card expense decreased due to the bank
converting to a new system for processing during the second quarter of 2006.
Outside service fees decreased due to expenses being charged in 2005 for
compliance with Sarbanes-Oxley Act of 2002. In order to prepare for the
anticipated applicability in 2008 of the audit requirements related to internal
control contained in Section 404 of Sarbanes-Oxley, outside service fees are
expected to increase approximately $200,000 in 2007. Teller shortages decreased
due to the bank robbery in 2005. Miscellaneous NSF and other check losses
decreased due to the bank experiencing a larger than normal volume of fraudulent
checks in 2005.

     Noninterest expenses increased $752,000 or 11.1% during 2005 over the prior
comparable period. The increase was primarily due to an increase in salaries and
employee benefits, occupancy expense, furniture and equipment expense and other
operating expenses. Salaries and employee benefits increased due to normal merit
increases, several new hires, a partial year of salaries and benefits for
employees of the Spring Mills branch in northern Berkeley County and a full year
of salaries and benefits for employees of the acquired Hancock, Maryland branch.
Employee benefits increased due to an increase in pension expense and the
increased number of employees. Although the bank changed its health insurance
program, effective January 1, 2005, to a high deductible plan with reduced per
employee premiums the insurance expense for 2005 showed an increase over the
same period in 2004 due to the increased number of employees. Concurrent with
the creation of the high deductible insurance plan, the Bank established a
vested health contribution plan which enables the Bank to contribute to health
reimbursement accounts for each employee on the plan. A $58,989 expense was
incurred in 2005 for the health reimbursement accounts. Additional utilities
expense and depreciation related to the new branch facility in Spring Mills and
a full year of expenses related to the acquired Hancock branch caused occupancy
expense and furniture and equipment expense to increase in 2005.

     Components of other operating expense, which significantly increased during
2005, included telephone expense, debit card expense, outside service fees,
audit, tax and accounting fees, miscellaneous NSF check and other losses and the
amortization of premium purchased for the Hancock branch facility. These
increases were offset by decreases in advertising, stationary, supplies and
printing, employee training, overdraft protection expense, legal fees and
business manager expense. Telephone expense increased due to the addition of two
branch facilities and increased usage. The increase in debit card expense is a
result of the increased deposit base of the bank and additional fraud protection
expense. Outside service fees and audit, tax and accounting fees increased due
to additional costs of compliance with new banking regulations and the
provisions of the Sarbanes-Oxley Act of 2002. The increase in miscellaneous NSF
check and other losses is due to an increased exposure of the bank to fraudulent
financial instruments and schemes. Stationary, supplies and printing decreased
due to the purchase of free CNB Bank, Inc. checks for all checking account
customers of the acquired Hancock branch in 2004. Employee training decreased as
a result of the outsourced staff training on Windows based products and other
specialized product training in 2004. Overdraft protection expense decreased due
to the expiration of the Bank's contract with Pinnacle Financial Strategies in
February 2004. Legal fees decreased as 2004 included expenses pertaining to the
Hancock branch acquisition. Business manager expense decreased due to the
continued decrease in the volume of receivables the bank purchased throughout
2005 due to a decline in customer need for the program. Advertising expense
decreased due to the concentrated advertising campaign in early 2004 which
related to the Hancock branch acquisition.


                                       18

<PAGE>

     The Company performs an annual test of impairment of acquired customer
lists. The annual test for impairment resulted in no loss for the years ended
December 31, 2006, 2005 or 2004. On June 1, 2006, the customer lists of CNB
Insurance Services, Inc. along with all other assets were sold to Maiden
Financial. See Note 16: Discontinued Operations in the Notes to Consolidated
Financial Statements for further discussion.

INCOME TAXES

     Provision for income tax totaled $1.3 million in 2006, $1.2 million in 2005
and $992,000 in 2004. The effective tax rate was 34.6% in 2006 compared to 33.6%
and 29.7% in 2005 and 2004, respectively. The Bank's income tax expense differs
from the amount computed at statutory rates primarily due to the tax-exempt
earnings from certain investment securities and loans, and non-deductible
expenses, such as life insurance premiums. See Note 14: Income Taxes in the
Notes to Consolidated Financial Statements for a comprehensive analysis of
income tax expense.

FINANCIAL CONDITION

     Table 5 examines CNB Bank, Inc.'s financial condition in terms of its
sources and uses of funds. Average funding sources and uses increased $25.2
million or 11.2% in 2006 compared with an increase of $24.6 million or 12.2% in
2005.

TABLE 5. SOURCES AND USES OF FUNDS

<TABLE>
<CAPTION>
                                     2006                          2005
                          --------------------------    --------------------------
                                         INCREASE                      INCREASE         2004
                                        (DECREASE)                    (DECREASE)      --------
                           AVERAGE   ---------------     AVERAGE   ---------------     AVERAGE
                           BALANCE    AMOUNT     %       BALANCE    AMOUNT     %       BALANCE
                          --------   -------   -----    --------   -------   -----    --------
                                                      In thousands
<S>                       <C>        <C>       <C>      <C>        <C>       <C>      <C>
Funding uses:
   Federal funds
      sold                $     27   $    (1)   (3.6)%  $     28   $(2,356)  (98.8)%  $  2,384
   Securities available
      for sale              55,972       635     1.1      55,337     9,741    21.4      45,596
   Loans                   194,712    24,554    14.4     170,158    17,174    11.2     152,984
                          --------   -------            --------   -------            --------
   Total uses             $250,711   $25,188    11.2%   $225,523   $24,559    12.2%   $200,964
                          ========   =======    ====    ========   =======   =====    ========
Funding sources:
   Interest-bearing
      demand deposits     $ 53,625   $  (266)   (0.5)%  $ 53,891   $12,010    28.7%   $ 41,881
   Savings deposits         30,586    (1,754)   (5.4)     32,340     3,718    13.0      28,622
   Time deposits            99,950    11,973    13.6      87,977    (4,982)   (5.4)     92,959
   Short-term
      borrowings            18,751    10,358   123.4       8,393     7,520   861.4         873
   Noninterest bearing
      funds, net(1)         47,799     4,877    11.4      42,922     6,293    17.2      36,629
                          --------   -------            --------   -------            --------
   Total sources          $250,711   $25,188    11.2%   $225,523   $24,559    12.2%   $200,964
                          ========   =======    ====    ========   =======   =====    ========
</TABLE>

(1)  Noninterest bearing liabilities and shareholders' equity less noninterest
     earning assets.

     Total assets increased $17.1 million or 6.6% to $276.1 million from
December 31, 2005 to December 31, 2006 due primarily to a $24.1 million increase
in loans offset by a $2.7 million decrease in cash and due from banks and a $4.3
million decrease in investment securities.

     Total liabilities increased $15.8 million or 6.6% to $255.7 million from
December 31, 2005 to December 31, 2006 substantially due to the increase in
deposits of $13.8 million, the increase in FHLB borrowings of $700,000, the
increase in accrued interest payable of $460,000 and an increase in accrued
expenses and other liabilities of $846,000. Shareholders' equity increased $1.3
million to $20.3 million at December 31, 2006 primarily due to net income of
$2.5 million, offset by a $449,000 decrease in accumulated other comprehensive
income and cash dividends of $705,000.

     The components of accumulated other comprehensive income at December 31,
2006, were unrealized gains and losses on available for sale securities, net of
deferred income taxes and unrecognized pension costs, net of deferred income
taxes. The decrease in accumulated other comprehensive income was due to the
increase in unrecognized pension costs offset by the lower unrealized market
value depreciation of the


                                       19
<PAGE>

available for sale investment security portfolio. The unrealized gains and
losses are primarily a function of available market interest rates relative to
the yield being generated on the available for sale portfolio. No earnings
impact results, however, unless the securities are actually sold. The additional
minimum pension liability adjustment in 2005 resulted from the accumulated
benefit obligation exceeding the fair value of plan assets. In 2006, CNB
implemented SFAS No. 158, "Employers' Accounting for Defined Benefit Pension and
Other Postretirement Plans" in which the unfunded liability resulting from the
projected benefit obligation exceeding the fair value of the plan assets is
recorded as a liability and any unrecognized pension costs are recorded net of
tax in accumulated other comprehensive income. See Note 11: Pension Plan in the
Notes to Consolidated Financial Statements for further details.

LOAN PORTFOLIO

     At December 31, 2006, total loans increased $24.1 million or 13.4% to
$204.3 million from $180.2 million at December 31, 2005. The Bank experienced
steady loan growth throughout 2006 with the first, second and fourth quarters of
2006 each showing loan growth over $6.0 million. Lending officers continue to be
proactive in their marketing efforts of the Bank's loan products. In addition,
the Bank offered an employee incentive program to generate loan demand. This
program generated over $11.2 million in new loan demand. The Bank's lending area
continues to see price appreciation of real property which contributes to the
increased mortgage loans outstanding. Interest rates have steadied, mortgage
rates have actually decreased and the population in the Bank's lending area
continues to increase, all leading to the Bank's increase in loan volume. The
loan mix changed slightly from December 31, 2005 with the consumer loan area
showing a decrease in outstandings for the time frame. Real estate and
commercial real estate loans continue to show strong growth for 2006. The Bank's
management believes additional growth in all lending areas is possible into year
2007. Management's intent is to control the loan volume in a manner which would
produce a loan to deposit ratio between 80% and 90% and maintain credit quality.
The loan to deposit ratio was 87.7% at December 31, 2006 and 82.2% at December
31, 2005. The ratio of net charge-offs to average loans outstanding was .09% in
2006 and .08% in 2005.

     Table 6 sets forth the amount of loans outstanding (net of unearned income)
as of the dates shown:

TABLE 6. LOANS AND LEASES OUTSTANDING

<TABLE>
<CAPTION>
                                                DECEMBER 31,
                            ----------------------------------------------------
                              2006       2005       2004       2003       2002
                            --------   --------   --------   --------   --------
                                         In thousands
<S>                         <C>        <C>        <C>        <C>        <C>
Real estate                 $143,767   $125,723   $108,159   $ 98,405   $ 83,239
Commercial real estate        36,967     29,492     22,759     21,521     13,935
Consumer                      15,934     16,802     16,405     16,853     22,575
Commercial                     9,172      9,314      8,881      8,934      9,685
Overdrafts                       163        356         82        136         73
                            --------   --------   --------   --------   --------
                            $206,003   $181,687   $156,286   $145,849   $129,507
Leases:                          124        145        166        186        135
                            --------   --------   --------   --------   --------
                            $206,127   $181,832   $156,452   $146,035   $129,642

Net deferred loan fees,
   premiums and discounts        324        397        275        238        172
Allowance for loan losses     (2,132)    (2,022)    (1,807)    (1,608)    (1,484)
                            --------   --------   --------   --------   --------
                            $204,319   $180,207   $154,920   $144,665   $128,330
                            ========   ========   ========   ========   ========
</TABLE>

     The commercial loan portfolio consisting of commercial business and
commercial real estate loans showed an increase in outstanding loans of $7.3
million from $38.8 million at December 31, 2005 to $46.1 million at December 31,
2006. The commercial loan portfolio is approximately 22% of the total loan
portfolio at December 31, 2006 compared to 21% at December 31, 2005. The Bank's
activity in the Berkeley County market continues to expand with the three branch
locations located in that area. The Bank's loan activity also increased in the
Maryland market after acquiring the Hancock, Maryland branch in June 2004. In
addition, the Bank's loan growth has benefited from significant real estate
development activity in Berkeley County, West Virginia. Management believes
additional growth in both commercial business and commercial real estate loans
is possible in 2007.

     Real estate mortgage loans comprised mainly of one to four family
residences continued to be the Bank's dominant loan category. Mortgage lending
comprises approximately 70% or $143.8 million of the total loan portfolio at
December 31, 2006 compared to 69% or $125.7 million at December 31, 2005. The
increase in real estate lending is attributable to the Bank's increased presence
in Berkeley County, West Virginia, the continued price appreciation of real
property in the Bank's market area and the increasing population in the Bank's
market area.

     The consumer loan portfolio showed a decrease of $1.1 million. The primary
factor causing the decrease was a decrease in the overall new and used car sales
during 2006. Additionally, the Bank experienced a decrease in dealer vehicle
loans due to local competition offering a


                                       20

<PAGE>

lower rate and/or better loan terms. Another factor impacting the consumer loan
portfolio change is a decrease of $193,000 in overdraft deposit accounts.

     Table 7 summarizes the approximate contractual maturity and sensitivity of
certain loan types to changes in interest rates as of December 31, 2006:

<TABLE>
<CAPTION>
                                                         DECEMBER 31, 2006
                                          ----------------------------------------------
                                          ONE YEAR   ONE THROUGH      OVER
                                           OR LESS    FIVE YEARS   FIVE YEARS     TOTAL
                                          --------   -----------   ----------   --------
                                                           In thousands
<S>                                       <C>        <C>           <C>          <C>
Commercial, financial and agricultural:
   Floating rate                           $21,184     $12,497       $ 1,236    $ 34,917
   Fixed rate                                3,465       4,221         3,536      11,222
                                           -------     -------       -------    --------
      Total                                $24,649     $16,718       $ 4,772    $ 46,139
                                           =======     =======       =======    ========
Real estate - mortgage:
   Floating rate                           $ 8,259     $40,503       $    --    $ 48,762
   Fixed rate                                4,365       3,148        79,275      86,788
                                           -------     -------       -------    --------
      Total                                $12,624     $43,651       $79,275    $135,550
                                           =======     =======       =======    ========
Real estate - construction:
   Floating rate                           $ 3,567     $    --       $    --    $  3,567
   Fixed rate                                4,650          --            --       4,650
                                           -------     -------       -------    --------
      Total                                $ 8,217     $    --       $    --    $  8,217
                                           =======     =======       =======    ========
Consumer:
   Floating rate                           $    86     $   148       $    --    $    234
   Fixed rate                                1,071      11,880         2,912      15,863
                                           -------     -------       -------    --------
      Total                                $ 1,157     $12,028       $ 2,912    $ 16,097
                                           =======     =======       =======    ========
Lease financing:
   Floating rate                           $    --     $    --       $    --    $     --
   Fixed rate                                    2           6           116         124
                                           -------     -------       -------    --------
      Total                                $     2     $     6       $   116    $    124
                                           =======     =======       =======    ========
</TABLE>

     The Bank has continued to experience a shift from a demand for variable
rate loans to a demand for fixed rate mortgage products. Demand for the variable
rate loans has continued to fall due to the rising interest rate environment
causing these products to not be as attractive as in the past. The Bank's
inhouse fixed rate products and secondary market fixed rate products, which are
sold to various investors, have seen a greater demand during 2006. As of
December 31, 2006, 48.1% of the Bank's mortgage loans were adjustable rate loans
and 51.9% were fixed rate loans. Compared to December 31, 2005, 51.2% of the
Bank's mortgage loans were adjustable rate loans and 48.8% were fixed rate
loans. Currently, the Bank has approximately $2.1 million in fixed rate loans in
the portfolio which were originated under terms that would allow them to be sold
on the secondary market, although there is no intent to sell these loans.

NONPERFORMING LOANS AND ALLOWANCE FOR LOAN LOSSES

     Nonperforming loans consist of loans in nonaccrual status and loans which
are past due 90 days or more and still accruing interest. Bank policy requires
those loans which are past due 90 days or more be placed on nonaccrual status
unless they are both well secured and in the process of collection. As of
December 31, 2006 and 2005, nonaccrual loans approximated .20% and .44% of total
loans (net), respectively. The Bank has no loans which are considered to be
impaired as of December 31, 2006 and 2005. As of December 31, 2006, management
is aware of six borrowers who have exhibited weaknesses. Their loans have
aggregate uninsured balances of $1.0 million. No specific allowance for these
loans has been established as part of the allowance for loan losses. The loans
are collateralized primarily by real estate and management anticipates that any
additional potential loss would be minimal.


                                       21

<PAGE>

     Table 8 sets forth the amounts of nonperforming loans as of the dates
indicated:

TABLE 8. NONPERFORMING ASSETS

<TABLE>
<CAPTION>
                                                                   DECEMBER 31
                                                         --------------------------------
                                                         2006   2005   2004   2003   2002
                                                         ----   ----   ----   ----   ----
                                                                   In thousands
<S>                                                      <C>    <C>    <C>    <C>    <C>
Nonaccrual loans                                         $402   $790   $381   $349   $ 13
Loans past due 90 days or more still accruing interest      5     --     --     27    553
Other real estate                                          --     --     --     --      2
                                                         ----   ----   ----   ----   ----
   Total                                                 $407   $790   $381   $376   $568
                                                         ====   ====   ====   ====   ====
</TABLE>

     The allowance for loan losses is the best estimate by management of the
probable losses which have been incurred as of the respective balance sheet
date. Management makes a determination quarterly by analyzing overall loan
quality, changes in the mix and size of the loan portfolio, previous loss
experience, general economic conditions, information about specific borrowers
and other factors. The Bank's methodology for determining the allowance for loan
losses establishes both an allocated and an unallocated component. The allocated
portion of the allowance represents the results of analyses of individual loans
that are being monitored for potential credit problems and pools of loans within
the portfolio. The allocated portion of the allowance for loans is based
principally on current loan risk ratings, historical loan loss rates adjusted to
reflect current conditions, as well as analyses of other factors that may have
affected the collectibility of loans in the portfolio. The Bank analyzes all
commercial loans that are being monitored as potential credit problems to
determine whether such loans are impaired, with impairment measured by reference
to the borrowers' collateral values and cash flows. The unallocated portion of
the allowance for loan losses represents the results of analyses that measure
probable losses inherent in the portfolio that are not adequately captured in
the allocated allowance analyses. These analyses include consideration of
unidentified losses inherent in the portfolio resulting from changing
underwriting criteria, changes in the types and mix of loans originated,
industry concentrations and evaluations, allowance levels relative to selected
overall credit criteria and other economic indicators used to estimate probable
incurred losses. At December 31, 2006 and 2005, the allowance for loan losses
totaled $2.1 million and $2.0 million, respectively. The allowance for loan
losses as a percentage of loans was 1.0% and 1.1% as of December 31, 2006 and
2005, respectively. The provision for loan losses exceeded net charge-offs by
$110,000 and $215,000 in 2006 and 2005, respectively.


                                       22

<PAGE>

     Table 9 shows a summary of the Bank's loan loss experience:

TABLE 9. ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                              2006       2005       2004       2003       2002
                                            --------   --------   --------   --------   --------
                                                                In thousands
<S>                                         <C>        <C>        <C>        <C>        <C>
Loans outstanding at end of year            $206,127   $181,832   $156,452   $146,035   $129,642
                                            ========   ========   ========   ========   ========
Daily average balance of loans and leases   $194,712   $170,158   $152,984   $136,658   $118,530
                                            ========   ========   ========   ========   ========
Balance of allowance for loan losses
   at beginning of year                     $  2,022   $  1,807   $  1,608   $  1,484   $  1,337
                                            --------   --------   --------   --------   --------
Loans charged off:
   Commercial, financial and agricultural   $     20   $     --   $     41   $      7   $      1
   Real estate - mortgage                         --         --         --         --          5
   Consumer                                      298        306        311        262        145
                                            --------   --------   --------   --------   --------
   Total loans charged off                  $    318   $    306   $    352   $    269   $    151
                                            --------   --------   --------   --------   --------
Recoveries:
   Commercial, financial and agricultural   $     --   $      2   $      5   $      2   $      2
   Consumer                                      152        167        153         79         35
                                            --------   --------   --------   --------   --------
   Total recoveries                         $    152   $    169   $    158   $     81   $     37
                                            --------   --------   --------   --------   --------
   Net charge-offs                          $    166   $    137   $    194   $    188   $    114
                                            --------   --------   --------   --------   --------
Provision charged to expense                $    276   $    352   $    393   $    312   $    261
                                            --------   --------   --------   --------   --------
Balance, end of year                        $  2,132   $  2,022   $  1,807   $  1,608   $  1,484
                                            ========   ========   ========   ========   ========

SELECTED ASSET QUALITY RATIOS:
Net charge-offs to average loans                0.09%      0.08%      0.13%      0.14%      0.10%
Allowance for loan losses to loans
   outstanding at end of year                   1.03%      1.11%      1.15%      1.10%      1.14%
Non-performing assets (1) to total assets       0.15%      0.31%      0.16%      0.19%      0.30%
Non-accrual loans to total loans                0.20%      0.43%      0.24%      0.24%      0.01%
</TABLE>

(1)  Includes accruing loans past due 90 days or more


                                       23
<PAGE>

     Table 10 summarizes the allocation of the allowance for loan losses by loan
type:

TABLE 10. HISTORICAL ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                        -------------------------------------------------------------------------------------------------
                               2006                2005                2004                2003                2002
                        -----------------   -----------------   -----------------   -----------------   -----------------
                                   % OF                % OF                % OF                % OF                % OF
                                 LOANS IN            LOANS IN            LOANS IN            LOANS IN            LOANS IN
                                   EACH                EACH                EACH                EACH                EACH
                        AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY   AMOUNT   CATEGORY
                        ------   --------   ------   --------   ------   --------   ------   --------   ------   --------
                                               In thousands
<S>                     <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>        <C>      <C>
Commercial, financial
   and agriculture      $1,231      22%     $1,056      21%     $  810      20%     $  782      21%     $  330       8%
Real estate-
   construction and
   mortgages               508      70        528       69         467      69         401      67         391      75
Consumer, leasing
   and other               225       8        303       10         323      11         274      12         364      17
Unallocated                168     N/A        135      N/A         207     N/A         151     N/A         399     N/A
                        ------     ---      ------     ---      ------     ---      ------     ---      ------     ---
      Total             $2,132     100%     $2,022     100%     $1,807     100%     $1,608     100%     $1,484     100%
                        ======     ===      ======     ===      ======     ===      ======     ===      ======     ===
</TABLE>

     The provision for loan losses is a charge to earnings which is made to
maintain the allowance for loan losses at a sufficient level. In 2006, 2005 and
2004, the provision totaled $276,000, $352,000 and $393,000, respectively. Past
due and nonaccrual loans have decreased and continue to be minimal and loan
quality remains good even though net charge offs as a percentage of average
loans increased slightly from .08% in 2005 to .09% in 2006. Therefore,
management decreased the provision for loan losses in 2006. Having decreased the
provision for loan losses, management believes the allowance for loan losses to
be adequate and is not aware of any information relating to the loan portfolio
which it expects will materially impact future operating results, liquidity or
capital resources. In addition, federal and state regulators may require
additional reserves as a result of their examination of the Bank. The allowance
for loan losses reflects what management currently believes is an adequate level
of allowance, although there can be no assurance that future losses will not
exceed the estimated amounts, thereby adversely affecting future results of
operations.

SECURITIES PORTFOLIO AND FEDERAL FUNDS SOLD

     The Bank's securities portfolio consists of available for sale securities
and restricted investments. Classifying the securities portfolio as available
for sale provides management with increased ability to manage the balance sheet
structure and address asset/liability management issues when needed. The fair
value of the investment portfolio has decreased $4.4 million to $52.6 million at
December 31, 2006 from December 31, 2005.

     The composition of the portfolio continues to reflect the Bank's
conservative philosophy which places greater importance on safety and liquidity
than on yield. At December 31, 2006, approximately 57.7% of the portfolio is
comprised of U.S. Government agencies and corporations, 16.2% in Mortgage Backed
securities, 22.8% in State and Municipal securities and 3.3% in restricted
investments. The term to maturity is limited to seven years for Treasury and
Agency bonds and 10 years for Municipal bonds. Typically, investments in Agency
bonds contain a call feature. These bonds generally have a somewhat higher
yield. The average term to maturity of the portfolio as of December 31, 2006 was
4.7 years.


                                       24

<PAGE>

     Table 11 sets forth the carrying amount of investment securities as of the
dates shown:

     TABLE 11. INVESTMENT SECURITIES

<TABLE>
<CAPTION>
                                                       DECEMBER 31
                                               ---------------------------
                                                 2006      2005      2004
                                               -------   -------   -------
                                                       In thousands
<S>                                            <C>       <C>       <C>
Available for sale:
   U.S. Government agencies and corporations   $30,347   $34,235   $39,114
   State and municipal securities               12,020    12,415    12,264
   Mortgage-backed securities                    8,506     8,544     8,362
Restricted securities                            1,753     1,809     1,300
                                               -------   -------   -------
      Total                                    $52,626   $57,003   $61,040
                                               =======   =======   =======
</TABLE>

     The Bank generally participates in the overnight federal funds sold market.
Depending upon specific investing or funding strategies and/or normal
fluctuations in loan and deposit balances, the Bank may need, on occasion, to
purchase funds on an overnight basis. The average balance in federal funds sold
decreased from $28,000 in 2005 to $27,000 in 2006. The continued lower federal
funds sold balance is a direct result of the Bank being in a borrowed position
to fund the excess of loan growth over deposit growth.

     See Note 3: Securities in the Notes to Consolidated Financial Statements
for a comprehensive analysis of the securities portfolio.

DEPOSITS AND OTHER FUNDING SOURCES

     Total deposits were $233.1 million at December 31, 2006, an increase of
$13.8 million or 6.3% over deposits at December 31, 2005. During the first
quarter of 2006, the Bank offered an incentive program to all bank employees to
generate deposits at all bank locations. This incentive program generated $6.2
million in new deposits for the Bank, of which approximately $4.0 million was in
other time deposits and rate sensitive jumbo certificates of deposit. During the
fourth quarter of 2006, another incentive program was offered to all bank
employees which generated over $4.7 million in new deposits. Another factor
contributing to the increase in other time deposits and rate sensitive jumbo
certificates of deposit are the competitive rates the Bank was offering on its
certificates of deposit during 2006. In our Washington County, Maryland market
area, there have been a number of bank mergers and CNB has benefited from these
mergers with the increased volume of new deposit accounts. The Bank's Washington
County, Maryland branch has grown $6.0 million in deposits since December 31,
2005. Although interest-bearing demand deposits show a decrease of $2.4 million
for 2006, core interest-bearing demand deposits actually grew $600,000 offset by
a $3.0 million decrease in two public fund deposit relationships which operate
in the Bank's market area.

     Average deposits showed a $13.4 million, or 6.3% growth, to $228.0 million
in 2006. Deposits at the Hedgesville branch totaled $19.8 million at December
31, 2006, a decrease of $1.0 million over December 31, 2005. Deposits at the
Martinsburg branch totaled $23.8 million at December 31, 2006, a decrease of
$2.1 million over December 31, 2005, which is the direct result of a decrease of
$2.5 million in the balances of the large public fund deposit account. Deposits
at the Spring Mills branch totaled $5.9 million at December 31, 2006, an
increase of $3.3 million over December 31, 2005.

     The Bank has continued to experience a change in the deposit account mix
during 2006. Noninterest-bearing deposits grew only slightly by $82,000 or .2%,
during 2006. At December 31, 2006, noninterest-bearing deposits represented
18.3% of total deposits, compared to 19.5% for 2005. Average noninterest-bearing
deposits increased 8.6% from $40.3 million in 2005 to $43.8 million in 2006. The
growth in noninterest-bearing deposits is attributable to steady growth during
the first three quarters of 2006 but a substantial decrease in the last quarter
of 2006. This decrease was a result of customers transferring excess funds into
short term certificates of deposit with attractive rates.

     Interest-bearing deposits increased by $13.7 million or 7.8% to $190.3
million at December 31, 2006. Interest-bearing checking deposits decreased by
$2.4 million in 2006, while, the average interest-bearing checking deposits only
decreased $266,000. Included in this category are NOW accounts and Money Market
accounts. The Bank's deposit runoff is primarily due to the decrease in the
deposits of the two large public fund depositors. The higher average balance
growth in deposits is due to the consistent level of growth for the entire year
of 2006. While the average savings deposits decreased $1.8 million or 5.4% to
$30.6 million in 2006, actual savings accounts decreased $4.8 million at
December 31, 2006 to $27.5 million. The difference between the decrease in
average savings deposits and actual savings deposits is due to the increase in
the runoff of savings accounts in the last quarter of 2006 due to depositors
investing in short term certificates of deposit carrying attractive rates. The
Bank's largest source of interest-bearing funds is certificates of deposit.
These accounts totaled $110.2 million at December 31, 2006, an increase of $20.9
million or 23.3%. This substantial increase is primarily due to customers
shifting their deposit dollars from noninterest bearing checking and interest
bearing savings accounts to higher interest bearing certificates of deposit. The
Bank featured two certificates of deposit throughout 2006 and in the last
quarter of 2006 there was an additional focus on short term certificates of
deposit with 91 day and 6 month terms. The two featured certificates of deposit
throughout 2006 were the 27-month nonrenewable Certificate of Deposit which
began in October 2005 and the new 14 month nonrenewable Certificate of Deposit.
The Bank's 27-month nonrenewable


                                       25

<PAGE>

Certificate of Deposit allows the customer to withdraw all of the CD on the
fifteen month anniversary date without penalty. Although no deposits may be made
to these CD's, both CD's offered attractive rates and became the certificates of
choice for bank customers.

     Table 12 is a summary of the maturity distribution of certificates of
deposit in amounts of $100,000 or more as of December 31, 2006:

TABLE 12. MATURITY OF TIME DEPOSITS OF $100,000 OR MORE

<TABLE>
<CAPTION>
                             AMOUNT    PERCENT
                            --------   -------
                               In thousands
<S>                         <C>        <C>
Three months or less        $  5,864     5.32%
Three through six months       8,456     7.67
Six through twelve months     28,328    25.70
Over twelve months            67,585    61.31
                            --------   ------
   Total                    $110,233   $  100%
                            ========   ======
</TABLE>

CONTRACTUAL OBLIGATIONS

     Table 13 shows the Bank's significant contractual obligations as of
December 31, 2006:

                             PAYMENTS DUE BY PERIOD

<TABLE>
<CAPTION>
                                                         LESS
                                                         THAN                              MORE THAN
                                             TOTAL      1 YEAR    1-3 YEARS   4-5 YEARS     5 YEARS
                                          ----------   --------   ---------   ---------   ----------
<S>                                       <C>          <C>        <C>         <C>         <C>
Purchase obligations                      $  130,263   $130,263    $    --     $    --    $       --
Other long-term liabilities
   reflected on the registrant's
   balance sheet under GAAP
      Supplemental retirement liability       97,924         --         --      17,500        80,424
      Pension liability                    1,494,404         --         --          --     1,494,404
      401k liability                          66,006     66,006         --          --            --
      Deferred compensation                  853,958      5,828      4,780          --       843,350
      Post retirement liability              187,560     22,933     53,311      46,655        64,661
                                          ----------   --------    -------     -------    ----------
Total contractual obligations             $2,830,115   $225,030    $58,091     $64,155    $2,482,839
                                          ==========   ========    =======     =======    ==========
</TABLE>

CAPITAL RESOURCES

     The Bank remains well capitalized. Total shareholders' equity at December
31, 2006 of $20.3 million represents 7.4% of total assets. This compares to
$19.0 million or 7.3%, at December 31, 2005. Included in capital at December 31,
2006 is $655,000 of unrealized losses on available for sale securities and $1.1
million unrecognized pension costs, both net of deferred income taxes. At
December 31, 2005, the Bank had unrealized losses on available for sale
securities of $756,000 and $516,000 minimum pension liability adjustment, both
net of deferred income taxes. Such unrealized gains and losses on the investment
portfolio are recorded net of related deferred taxes and are primarily a
function of available market interest rates relative to the yield being
generated on the available for sale portfolio. No earnings impact will result,
however, unless the securities are actually sold.

     The Federal Reserve's risk-based capital guidelines provide for the
relative weighting of both on-balance-sheet and off-balance-sheet items based on
their degree of risk. The Bank continues to exceed all regulatory capital
requirements, and is unaware of any trends or uncertainties, nor do any plans
exist, which may materially impair or alter its capital position.


                                       26

<PAGE>

RETURN ON EQUITY AND ASSETS

     Table 14 shows consolidated operating and capital ratios for the periods
indicated:

TABLE 14. OPERATING AND CAPITAL RATIOS

<TABLE>
<CAPTION>
                                          YEARS ENDED
                                          DECEMBER 31,
                                         -------------
                                          2006    2005
                                         -----   -----
<S>                                      <C>     <C>
Return on average assets                  0.92%   1.00%
Return on average equity                 12.46   12.91
Dividend payout ratio                    28.57   26.97
Average equity to average assets ratio    7.35    7.76
</TABLE>

LIQUIDITY AND INTEREST RATE SENSITIVITY

     The objective of the Bank's liquidity management program is to ensure the
continuous availability of funds to meet the withdrawal demands of depositors
and the credit needs of borrowers. The basis of the Bank's liquidity comes from
the stability of its core deposits. Liquidity is also available through the
available for sale securities portfolio and short-term funds such as federal
funds sold. At December 31, 2006, these sources totaled $50.9 million, or 18.4%
of total assets. In addition, liquidity may be generated through loan
repayments, over $7.5 million of available borrowing arrangements with
correspondent banks and available collateralized borrowings from the Federal
Home Loan Bank. At December 31, 2006, management considered the Bank's ability
to satisfy its anticipated liquidity needs over the next twelve months.
Management believes that the Bank is well positioned and has ample liquidity to
satisfy these needs. The Bank generated $3.6 million of cash from operations in
2006, which compares to $4.1 million in 2005 and $2.2 million in 2004.
Additional cash of $13.8 million, $19.9 million and $19.2 million was generated
through net financing activities in 2006, 2005 and 2004, respectively. These
proceeds along with proceeds from the sales and maturities of investment
securities were used to fund loans and purchase securities during each year. Net
cash used in investing activities totaled $20.1 million in 2006 compared to
$24.0 million in 2005 and $19.1 million in 2004. Details on both the sources and
uses of cash are presented in the Consolidated Statements of Cash Flows
contained in the financial statements.

     The objective of the Bank's interest rate sensitivity management program,
also known as asset/liability management, is to maximize net interest income
while minimizing the risk of adverse effects from changing interest rates. This
is done by controlling the mix and maturities of interest-sensitive assets and
liabilities. The Bank has established an asset/liability committee for this
purpose. Daily management of the Bank's sensitivity of earnings to changes in
interest rates within the Bank's policy guidelines are monitored by using a
combination of off-balance sheet and on-balance sheet financial instruments. The
Bank's Chief Executive Officer, Senior Lending Officer, Chief Financial Officer
and the Chief Operations Officer monitor day to day deposit flows, lending
requirements and the competitive environment. Rate changes occur within policy
guidelines if necessary to minimize adverse effects. Also, the Bank's policy is
intended to ensure that the Bank measures a range of rate scenarios and patterns
of rate movements that are reasonably possible.

     One common interest rate risk measure is the gap, or the difference between
rate sensitive assets and rate sensitive liabilities. A positive gap occurs when
rate-sensitive assets exceed rate-sensitive liabilities. This tends to be
beneficial in rising interest rate environments. A negative gap refers to the
opposite situation and tends to be beneficial in declining interest rate
environments. However, the gap does not consider future changes in the volume of
rate sensitive assets or liabilities or the possibility that interest rates of
various products may not change by the same amount or at the same time. In
addition, certain assumptions must be made in constructing the gap. For example,
the Bank considers administered rate deposits, such as savings accounts, to be
immediately rate sensitive although their actual rate sensitivity could differ
from this assumption. The Bank monitors its gap on a quarterly basis.


                                       27
<PAGE>

TABLE 15. INTEREST SENSITIVITY ANALYSIS

<TABLE>
<CAPTION>
                                                                     DECEMBER 31, 2006
                                                                INTEREST SENSITIVITY PERIOD
                                         -------------------------------------------------------------------------
                                           2007     2008       2009       2010       2011     THEREAFTER    TOTAL    FAIR VALUE
                                         -------  --------   --------   --------   --------   ----------  --------   ----------
                                                                              In thousands
<S>                                      <C>      <C>        <C>        <C>        <C>        <C>         <C>        <C>
Rate sensitive assets
Loans, net of unearned interest          $80,532  $ 16,879   $ 17,010   $ 13,281   $ 13,764    $ 62,855   $204,319    $203,467
   Average interest rate                    6.35%     6.79%      6.63%      6.70%      6.75%       7.25%      6.65%
Securities                                 2,499       830        934      3,442      3,547      39,623     50,873      50,873
   Average interest rate                    5.00%     4.81%      4.73%      4.70%      4.69%       4.70%      4.77%
                                         -------  --------   --------   --------   --------    --------   --------
   Total interest sensitive assets       $83,031  $ 17,708   $ 17,943   $ 16,722   $ 17,310    $102,478   $255,192
                                         =======  ========   ========   ========   ========    ========   ========
Interest sensitive liabilities
Non-interest-bearing deposits            $ 4,275  $  4,275   $  4,275   $  4,275   $  4,275    $ 21,376     42,752    $ 42,752
   Average interest rate                      --%       --%        --%        --%        --%         --%        --%
Savings and interest-bearing checking      8,010     8,010      8,010      8,010      8,010      40,049     80,098      80,098
   Average interest rate                    1.85%     1.85%      1.85%      1.85%      1.85%       1.85%      1.85%
Time deposits                             42,648    37,953     19,278      5,174      5,180          --    110,233     113,762
   Average interest rate                    5.00%     5.15%      4.60%      4.50%      4.80%         --%      4.80%
                                         -------  --------   --------   --------   --------    --------   --------
   Total interest sensitive liabilities  $54,933  $ 50,238   $ 31,563   $ 17,459   $ 17,465    $ 61,425   $233,083
                                         =======  ========   ========   ========   ========    ========   ========
GAP                                      $28,098  $(32,530)  $(13,620)  $   (737)  $   (155)   $ 41,053
Cumulative GAP                           $28,098  $ (4,432)  $(18,052)  $(18,789)  $(18,943)   $ 22,110
GAP to sensitive assets ratio              11.01%   (12.75)%    (5.34)%    (0.29)%    (0.06)%     16.09%
Cumulative GAP to sensitive
   assets ratio                            11.01%    (1.74)%    (7.07)%    (7.36)%    (7.42)%      8.66%
GAP to total assets ratio                  10.18%   (11.78)%    (4.93)%    (0.27)%    (0.06)%     14.87%
Cumulative GAP to total assets ratio       10.18%    (1.61)%    (6.54)%    (6.81)%    (6.86)%      8.01%
</TABLE>

IMPACT OF INFLATION

     The results of operations and financial position of the Bank have been
presented based on historical cost, unadjusted for the effects of inflation,
except for the recording of unrealized gains and losses on securities available
for sale. Inflation could significantly impact the value of the Bank's interest
rate-sensitive assets and liabilities and the cost of noninterest expenses, such
as salaries, benefits and other operating expenses. Management of the money
supply by the Federal Reserve to control the rate of inflation may have an
impact on the earnings of the Bank. Further, changes in interest rates to
control inflation may have a corresponding impact on the ability of certain
borrowers to repay loans granted by the Bank.

     As a financial intermediary, the Bank holds a high percentage of interest
rate-sensitive assets and liabilities. Consequently, the estimated fair value of
a significant portion of the Bank's assets and liabilities change more
frequently than those of non-banking entities. The Bank's policies attempt to
structure its mix of financial instruments and manage its interest rate
sensitivity in order to minimize the potential adverse effects of market forces
on its net interest income, earnings and capital.

     A comparison of the carrying value of the Bank's financial instruments to
their estimated fair value as of December 31, 2006 and December 31, 2005 is
disclosed in Note 22: Fair Value of Financial Instruments in the Notes to the
Consolidated Financial Statements.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     See "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Liquidity and Interest Rate Sensitivity" in Item 7
hereof.


                                       28

<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The following audited consolidated financial statements are set forth in
this Annual Report of Form 10-K on the following pages:

<TABLE>
<S>                                                                           <C>
CNB Financial Services, Inc. and Subsidiary
   Independent Registered Public Accounting Firm Report....................   30
   Consolidated Balance Sheets.............................................   31
   Consolidated Statements of Income.......................................   32
   Consolidated Statements of Stockholders' Equity.........................   33
   Consolidated Statements of Cash Flows...................................   34
   Notes to Consolidated Financial Statements..............................   35
</TABLE>


                                       29

<PAGE>

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Shareholders and Board of Directors
CNB Financial Services, Inc.
Berkeley Springs, West Virginia

          We have audited the accompanying consolidated statements of financial
condition of CNB Financial Services, Inc. and subsidiary as of December 31, 2006
and 2005, and the related consolidated statements of income, changes in
shareholders' equity, and cash flows for each of the three years in the period
ended December 31, 2006. These financial statements are the responsibility of
CNB Financial Services, Inc.'s management. Our responsibility is to express an
opinion on these financial statements based on our audits.

          We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

          In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position of CNB
Financial Services, Inc. and subsidiary as of December 31, 2006 and 2005, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2006 in conformity with accounting principles
generally accepted in the United States of America.

          As described in Notes 1 and 11 to the financial statements, CNB
Financial Services, Inc. changed its method of accounting for its pension plan
in 2006 as required by the provisions of Statement Financial Accounting Standard
No. 158.


                                        /s/ SMITH ELLIOTT KEARNS & COMPANY, LLC

Hagerstown, Maryland

February 22, 2007


                                       30
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                           DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                        2006          2005
                                                    ------------   ------------
<S>                                                 <C>            <C>
ASSETS
   Cash and due from banks                          $  7,358,773   $ 10,085,252
   Federal funds sold                                      9,000         38,000
   Securities available for sale
      (at approximate market value)                   50,873,335     55,194,216
   Federal Home Loan Bank stock, at cost               1,753,000      1,669,900
   Federal Reserve Bank stock, at cost                        --        138,650
   Loans and leases receivable, net                  204,318,993    180,207,390
   Accrued interest receivable                         1,354,041      1,230,777
   Premises and equipment, net                         6,327,294      6,601,463
   Deferred income taxes                               1,482,166      1,159,595
   Cash surrender value of life insurance              1,394,521      1,279,690
   Intangible assets                                     497,178        620,593
   Other assets                                          700,240        727,896
                                                    ------------   ------------
      TOTAL ASSETS                                  $276,068,541   $258,953,422
                                                    ============   ============
        LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Deposits:
      Demand                                        $ 42,751,409   $ 42,669,886
      Interest-bearing demand                         52,549,478     54,900,737
      Savings                                         27,548,990     32,342,957
      Time, $100,000 and over                         37,760,199     30,659,767
      Other time                                      72,472,664     58,715,079
                                                    ------------   ------------
                                                    $233,082,740   $219,288,426
   Accrued interest payable                            1,071,990        611,512
   FHLB borrowings                                    18,500,000     17,800,000
   Accrued expenses and other liabilities              3,091,549      2,245,443
                                                    ------------   ------------
      TOTAL LIABILITIES                             $255,746,279   $239,945,381
                                                    ------------   ------------
SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000 shares
      authorized; 458,048 shares outstanding        $    458,048   $    458,048
   Capital surplus                                     4,163,592      4,163,592
   Retained earnings                                  17,421,402     15,658,134
   Accumulated other comprehensive income (loss)      (1,720,780)    (1,271,733)
                                                    ------------   ------------
      TOTAL SHAREHOLDERS' EQUITY                    $ 20,322,262   $ 19,008,041
                                                    ------------   ------------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $276,068,541   $258,953,422
                                                    ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       31

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                        CONSOLIDATED STATEMENTS OF INCOME
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                        2006          2005         2004
                                                    -----------   -----------   -----------
<S>                                                 <C>           <C>           <C>
INTEREST INCOME
   Interest and fees on loans                       $13,481,504   $11,110,517   $ 9,839,122
   Interest and dividends on securities:
      U.S. Government agencies and
         corporations                                 1,560,210     1,489,230     1,191,842
      Mortgage backed securities                        441,166       358,302       357,734
      State and political subdivisions                  403,097       417,242       273,249
      Dividend income                                    81,663        40,212        19,718
   Interest on FHLB deposits                             20,396         3,988         1,140
   Interest on federal funds sold                         1,317           797        32,677
                                                    -----------   -----------   -----------
                                                    $15,989,353   $13,420,288   $11,715,482
                                                    -----------   -----------   -----------
INTEREST EXPENSE
   Interest on interest bearing demand,
      savings and time deposits                     $ 5,290,613   $ 3,551,774   $ 3,154,811
   Interest on FHLB borrowings                          978,243       298,287        14,622
                                                    -----------   -----------   -----------
                                                    $ 6,268,856   $ 3,850,061   $ 3,169,433
                                                    -----------   -----------   -----------
         NET INTEREST INCOME                        $ 9,720,497   $ 9,570,227   $ 8,546,049
PROVISION FOR LOAN LOSSES                               275,500       352,000       393,000
                                                    -----------   -----------   -----------
         NET INTEREST INCOME AFTER
            PROVISION FOR LOAN LOSSES               $ 9,444,997   $ 9,218,227   $ 8,153,049
                                                    -----------   -----------   -----------
NONINTEREST INCOME
   Service charges on deposit accounts              $ 1,273,409   $ 1,227,521   $ 1,177,252
   Other service charges and fees                       470,101       391,099       294,535
   Trust fee income                                     199,348       174,900       140,114
   Insurance income                                          --       142,523       135,068
   Other operating income                                61,360        59,224        54,306
   Net gain (loss) on sale of securities                (37,271)      (16,165)      135,546
   Income from title company                             20,668        27,924        35,207
                                                    -----------   -----------   -----------
                                                    $ 1,987,615   $ 2,007,026   $ 1,972,028
                                                    -----------   -----------   -----------
NONINTEREST EXPENSES
   Salaries                                         $ 3,065,040   $ 3,061,375   $ 2,708,253
   Employee benefits                                  1,258,295     1,092,788       930,597
   Occupancy of premises                                509,945       436,247       377,322
   Furniture and equipment expense                      812,216       891,768       790,932
   Other operating expenses                           2,114,276     2,059,080     1,982,090
   Net (gain) loss on disposal of fixed assets           19,756            --           273
                                                    -----------   -----------   -----------
                                                    $ 7,779,528   $ 7,541,258   $ 6,789,467
                                                    -----------   -----------   -----------
         INCOME BEFORE INCOME TAXES                 $ 3,653,084   $ 3,683,995   $ 3,335,610
PROVISION FOR INCOME TAXES                            1,263,126     1,238,416       991,917
                                                    -----------   -----------   -----------
         INCOME FROM CONTINUING OPERATIONS          $ 2,389,958   $ 2,445,579   $ 2,343,693
                                                    -----------   -----------   -----------
         NET RESULTS FROM DISCONTINUED OPERATIONS
            OF CNB INSURANCE SERVICES, INC
            BEFORE INCOME TAXES                     $   124,157   $        --   $        --
PROVISION FOR INCOME TAXES                          $    45,453   $        --   $        --
                                                    -----------   -----------   -----------
         NET RESULTS OF DISCONTINUED OPERATIONS     $    78,704   $        --   $        --
                                                    -----------   -----------   -----------
         NET INCOME                                 $ 2,468,662   $ 2,445,579   $ 2,343,693
                                                    ===========   ===========   ===========
BASIC EARNINGS PER SHARE                            $      5.39   $      5.34   $      5.12
                                                    ===========   ===========   ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       32
<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                           ACCUMULATED
                                                                                              OTHER           TOTAL
                                                     COMMON      CAPITAL      RETAINED    COMPREHENSIVE   SHAREHOLDERS'
                                                      STOCK      SURPLUS      EARNINGS    INCOME (LOSS)       EQUITY
                                                    --------   ----------   -----------   -------------   -------------
<S>                                                 <C>        <C>          <C>           <C>             <C>
BALANCE, DECEMBER 31, 2003                          $458,048   $3,863,592   $12,460,556    $  (213,255)    $16,568,941
                                                                                                           -----------
Comprehensive income:
      Net income for 2004                                 --           --     2,343,693             --       2,343,693
   Change in unrealized gains
      (losses) on securities available
      for sale (net of tax of $65,354)                    --           --            --       (106,630)       (106,630)
   Change in minimum pension liability
      adjustment (net of tax of $15,419)                  --           --            --        (25,159)        (25,159)
                                                                                                           -----------
Total Comprehensive Income                                                                                   2,211,904
                                                                                                           -----------
Cash dividends ($1.38 per share)                          --           --      (632,105)            --        (632,105)
                                                    --------   ----------   -----------    -----------     -----------
BALANCE, DECEMBER 31, 2004                          $458,048   $3,863,592   $14,172,144    $  (345,044)    $18,148,740
                                                                                                           -----------
Comprehensive income:
      Net income for 2005                                 --           --     2,445,579             --       2,445,579
      Transfer to capital surplus                         --      300,000      (300,000)            --              --
   Change in unrealized gains
      (losses) on securities available
      for sale (net of tax of $432,965)                   --           --            --       (706,418)       (706,418)
   Change in minimum pension liability
      adjustment (net of tax of $135,005)                 --           --            --       (220,271)       (220,271)
                                                                                                           -----------
Total Comprehensive Income                                                                                   1,518,890
                                                                                                           -----------
Cash dividends ($1.44 per share)                          --           --      (659,589)            --        (659,589)
                                                    --------   ----------   -----------    -----------     -----------
BALANCE, DECEMBER 31, 2005                          $458,048   $4,163,592   $15,658,134    $(1,271,733)    $19,008,041
                                                                                                           -----------
Comprehensive income:
      Net income for 2006                                 --           --     2,468,662             --       2,468,662
   Change in unrealized gains
      (losses) on securities available
      for sale (net of tax of $61,559)                    --           --            --        100,439         100,439
   Change in minimum pension liability
      adjustment (net of tax of $46,688)                  --           --            --         76,175          76,175
                                                                                                           -----------
Total Comprehensive Income                                                                                   2,645,276
                                                                                                           -----------
Adjustment to initially apply FASB
      Statement No. 158, (net of tax of $383,469)         --           --            --       (625,661)       (625,661)
Cash dividends ($1.54 per share)                          --           --      (705,394)            --        (705,394)
                                                    --------   ----------   -----------    -----------     -----------
BALANCE, DECEMBER 31, 2006                          $458,048   $4,163,592   $17,421,402    $(1,720,780)    $20,322,262
                                                    ========   ==========   ===========    ===========     ===========
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       33

<PAGE>

                   CNB FINANCIAL SERVICES, INC. AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                                 2006           2005           2004
                                                                             ------------   ------------   ------------
<S>                                                                          <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net income                                                                $  2,468,662   $  2,445,579   $  2,343,693
   Adjustments to reconcile net income to net cash
      provided by operating activities:
         Depreciation and amortization                                            709,304        833,406        691,928
         Provision for loan losses                                                275,500        352,000        393,000
         Deferred income taxes                                                    (47,349)       (79,401)       (79,046)
         Net (gain) loss on sale and calls of securities                           37,271         16,165       (135,546)
         Loss on disposal and abandonment of fixed assets                          19,756             --            273
         Gain on sale of CNB Insurance Services, Inc                             (143,913)            --             --
         (Increase) in accrued interest receivable                               (123,264)      (188,204)      (169,388)
         (Increase) decrease in other assets                                     (131,488)       562,856       (713,422)
         Increase (decrease) in accrued interest payable                          460,478         67,961       (130,073)
         (Increase) in cash surrender value on life insurance in excess
            of premiums paid                                                      (56,009)       (51,946)       (44,665)
         Increase in accrued expenses and other liabilities                        58,413         31,265          1,465
         Amortization of deferred loan (fees) cost                                 60,439         64,778         25,490
         Amortization (accretion) of premium and discount on investments           15,803         63,184         62,601
                                                                             ------------   ------------   ------------
            NET CASH PROVIDED BY OPERATING ACTIVITIES                        $  3,603,603   $  4,117,643   $  2,246,310
                                                                             ------------   ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Net (increase) in loans                                                    (24,447,542)   (25,704,586)    (2,252,891)
   Proceeds from sales of securities                                           12,218,693     37,026,097      6,391,436
   Proceeds from maturities, repayments and calls of securities                 2,675,837      2,711,425     13,152,311
   Purchases of securities                                                    (10,464,725)   (36,410,179)   (40,021,143)
   Purchases of Federal Home Loan Bank stock                                   (6,356,000)    (6,909,700)    (1,146,200)
   Purchases of Federal Reserve Bank stock                                             --         (9,000)            --
   Redemptions of Federal Reserve Bank stock                                      138,650             --             --
   Redemptions of Federal Home Loan Bank stock                                  6,272,900      6,409,600        842,100
   Purchases of premises and equipment and computer software                     (280,657)    (1,072,130)      (917,609)
   Proceeds from sale of CNB Insurance Services Inc                               153,332             --             --
   Investment in (return of capital from) title company                               332            575           (607)
   Net (increase) decrease in federal funds sold                                   29,000         53,000        (88,000)
   Premiums paid on life insurance                                                (58,822)       (58,822)       (58,822)
   Cash from acquired branch                                                           --             --      5,020,017
                                                                             ------------   ------------   ------------
            NET CASH (USED IN) INVESTING ACTIVITIES                          $(20,119,002)  $(23,963,720)  $(19,079,408)
                                                                             ------------   ------------   ------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Net increase (decrease) in demand and savings deposits                    $ (7,063,703)  $ 12,911,331   $ 20,904,756
   Net increase (decrease) in time deposits                                    20,858,017     (1,351,443)    (8,649,803)
   Net increase (decrease) in securities sold under repurchase agreement               --       (216,909)       216,909
   Net increase in FHLB borrowings                                                700,000      9,200,000      7,400,000
   Cash dividends paid                                                           (705,394)      (659,589)      (632,105)
                                                                             ------------   ------------   ------------
            NET CASH PROVIDED BY FINANCING ACTIVITIES                        $ 13,788,920   $ 19,883,390   $ 19,239,757
                                                                             ------------   ------------   ------------
            NET INCREASE (DECREASE) IN CASH AND CASH
               EQUIVALENTS                                                   $ (2,726,479)  $     37,313   $  2,406,659
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR                                 10,085,252     10,047,939      7,641,280
                                                                             ------------   ------------   ------------
CASH AND CASH EQUIVALENTS AT END OF YEAR                                     $  7,358,773   $ 10,085,252   $ 10,047,939
                                                                             ============   ============   ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
   Cash paid during the year:
      Interest                                                               $  5,808,377   $  3,782,100   $  3,299,506
      Income taxes                                                           $  1,386,500   $  1,362,725   $  1,169,009
The Company acquired certain assets and liabilities associated with the
Hancock Branch of Fidelity Bank.  In conjunction with the acquisition, the
assets acquired and liabilities assumed were as follows:
   Fair value of assets acquired                                             $         --   $         --   $  9,561,420
                                                                             ------------   ------------   ------------
   Fair value of liabilities assumed                                         $         --   $         --   $ 14,581,437
                                                                             ------------   ------------   ------------
   Liabilities assumed in excess of assets acquired (cash received)          $         --   $         --   $  5,020,017
                                                                             ============   ============   ============
</TABLE>

The Notes to Consolidated Financial Statements are an integral part of these
statements.


                                       34
<PAGE>

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     The following is a description of the more significant accounting policies
     of CNB Financial Services, Inc. and its subsidiary.

     NATURE OF OPERATIONS:

     CNB Financial Services, Inc. ("CNB" or the "Company") is a financial
     services holding company incorporated under the laws of West Virginia in
     March 2000. It became a bank holding company when it acquired all of the
     common stock of Citizens National Bank of Berkeley Springs on August 31,
     2000.

     Citizens National Bank operated as a national banking association until
     October 16, 2006 at which time it became a West Virginia state chartered
     bank. Concurrent with the charter change, the bank began operating under
     the legal name of CNB Bank, Inc.

     CNB Bank, Inc. (the "Bank"), a wholly owned subsidiary of CNB, provides a
     variety of banking services to individuals and businesses through its two
     locations in Morgan County, West Virginia, three locations in Berkeley
     County, West Virginia and one location in Washington County, Maryland. Its
     primary deposit products are demand deposits and certificates of deposit,
     and its primary lending products are commercial business, real estate
     mortgage and installment loans.

     In February 2001, CNB became a 50% member in a limited liability company,
     Morgan County Title Insurance Agency, LLC which sells title insurance. In
     January 2003, the other two members in the limited liability corporation
     purchased a portion of CNB's membership making each member's share 33%.

     The Bank formed CNB Insurance Services, Inc., a wholly owned subsidiary,
     which was a property and casualty insurance agency selling primarily
     personal lines of insurance. On April 27, 2006, CNB Insurance Services,
     Inc. entered into an agreement with Maiden Financial, Inc. Under the terms
     of the agreement, which was completed on June 1, 2006, CNB Insurance
     Services, Inc. sold to Maiden Financial Inc. certain assets constituting
     CNB Insurance Services, Inc.'s insurance business for a purchase price of
     $153,332 resulting in a gain of $143,913.

     The accounting policies of the Company and its subsidiary conform to
     accounting principles generally accepted in the United States of America
     and to general practices within the banking industry.

     PRINCIPLES OF CONSOLIDATION:

     The consolidated financial statements of CNB Financial Services, Inc.
     include the accounts of the Company and its wholly owned subsidiary, CNB
     Bank, Inc. and CNB Insurance Services, Inc., a wholly owned subsidiary of
     the Bank. The financial statements of Morgan County Title Insurance Agency,
     LLC are not included in these consolidated financial statements. All
     significant intercompany transactions and balances have been eliminated.

     USE OF ESTIMATES:

     The preparation of the consolidated financial statements in conformity with
     accounting principles generally accepted in the United States of America
     requires management to make estimates and assumptions that affect the
     reported amounts of assets and liabilities and disclosure of contingent
     assets and liabilities at the date of the financial statements and the
     reported amounts of revenues and expenses during the reporting period.
     Actual results could differ from those estimates. CNB's most significant
     estimates are the allowance for loan losses, depreciable lives of fixed
     assets and actuarial assumptions used in determining pension expense and
     liability, liability for postretirement benefits and liability for deferred
     compensation.

     SECURITIES AND MORTGAGE-BACKED SECURITIES:

     Investments in equity securities that have readily determinable fair values
     and for all investments in debt securities are classified and accounted for
     as follows:

          a. Debt securities that management has the positive intent and ability
     to hold to maturity are classified as held-to-maturity securities and
     reported at amortized cost.

          b. Debt and equity securities that are bought and held principally for
     the purpose of selling them in the near term are classified as trading
     securities and reported at fair value, with unrealized gains and losses
     included in earnings.

          c. Debt and equity securities not classified as either
     held-to-maturity securities or trading securities are classified as
     available-for-sale securities and reported at fair value, with unrealized
     gains and losses excluded from earnings and reported in a separate
     component of shareholders' equity as accumulated other comprehensive
     income.

     CNB classifies all investments as available for sale, except for stock in
     the Federal Reserve Bank and Federal Home Loan Bank, which are restricted
     investments.


                                       35

<PAGE>

     Interest and dividends on securities, including amortization of premiums
     and accretion of discounts, are included in interest income. Declines in
     the fair value of available-for-sale securities below their cost that are
     deemed to be other than temporary are reflected in earnings as realized
     losses. In estimating other-than-temporary impairment losses, management
     considers (1) the length of time and the extent to which the fair value has
     been less than cost, (2) the financial condition and near-term prospects of
     the issuer, and (3) the intent and ability of the Company to retain its
     investment in the issuer for a period of time sufficient to allow for any
     anticipated recovery in fair value. Realized gains and losses from the
     sales of securities are determined using the specific identification
     method.

     IMPAIRED LOANS:

     Impaired loans are defined as those loans for which it is probable that
     contractual amounts due will not be received. Statement of Financial
     Accounting Standards (SFAS) No. 114, "Accounting by Creditors for
     Impairment of a Loan," as amended by SFAS No. 118, requires that the
     measurement of impaired loans is based on the present value of expected
     future cash flows discounted at the historical effective interest rate,
     except that all collateral-dependent loans are measured for impairment
     based on the fair value of the collateral. Larger groups of small-balance
     loans such as residential mortgage and installment loans that are
     considered to be part of homogeneous loan pools are aggregated for the
     purpose of measuring impairment, and therefore, are not subject to these
     statements. Management has established a dollar-value threshold for
     commercial loans. The larger commercial loans are evaluated for impairment.
     No loans are considered to be impaired at December 31, 2006 and 2005.

     ALLOWANCE FOR LOAN LOSSES:

     The allowance for loan losses is maintained at a level which, in
     management's judgment, is adequate to absorb credit losses inherent in the
     loan portfolio. The amount of the allowance is based on management's
     evaluation of the collectibility of the loan portfolio, including the
     nature of the portfolio, credit concentrations, trends in historical loss
     experience, specific impaired loans and economic conditions.

     Allowances for loan losses and impaired loans are generally determined
     based on collateral values or the present value of estimated cash flows.
     The allowance is increased by a provision for loan losses, which is charged
     to expense and reduced by charge-offs, net of recoveries. Changes in the
     allowance are charged or credited to the provision for loan losses. Because
     of uncertainties inherent in the estimation process, management's estimate
     of credit losses inherent in the loan portfolio and the related allowance
     may change in the near term.

     LOANS HELD FOR SALE:

     Mortgage loans held for sale are recorded at the lower of cost or market
     value. Gains and losses realized from the sale of loans and adjustments to
     market value are included in non-interest income. Mortgage loans are
     sometimes sold to the Federal Home Loan Mortgage Corporation (Freddie Mac),
     West Virginia Housing Development Fund, other secondary market investors
     and other commercial banks. Beginning in January 2007, all fixed rate
     mortgage loans will be sold to secondary market investors.

     INTANGIBLE ASSETS:

          Intangible assets represent the acquisition of customer lists,
     contracts and records in the amount of $66,267 by CNB Insurance Services,
     Inc. and the $780,616 premium from the purchase of core deposit
     relationships as part of the Hancock branch acquisition. The CNB Insurance
     Services, Inc. intangible assets were being amortized over four years on a
     straight line basis and the core deposit intangible relationships from the
     Hancock branch acquisition are being amortized over seven years on a
     straight line basis. As of June 1, 2006, the remaining unamortized balance
     of the intangible asset for CNB Insurance Services, Inc. amounting to
     $9,419 was included in the sale to Maiden Financial. See Note 16:
     Discontinued Operations in the Notes to Consolidated Financial Statements
     for additional discussion.

     LOAN SERVICING:

     The cost of mortgage servicing rights is amortized in proportion to, and
     over the period of, estimated net servicing revenues. Impairment of
     mortgage servicing rights is assessed based on the fair value of those
     rights. Fair values are estimated using discounted cash flows based on a
     current market interest rate. For purposes of measuring impairment, the
     rights are stratified based on the predominant risk characteristics of the
     underlying loans: product type, investor type, interest rate, term and
     geographic location. An analysis of the risk characteristics of CNB's loan
     servicing portfolio allows for all loans to be defined by one risk
     category. See Note 5: Loan Servicing in the Notes to Consolidated Financial
     Statements for additional discussion.

     INTEREST INCOME ON LOANS:

     Interest on loans is accrued and credited to income based on the principal
     amount outstanding. The accrual of interest on loans is discontinued at the
     time the loan becomes 90 days past due unless in management's judgment
     collectibility of interest is assured.

     NONPERFORMING/NONACCRUAL ASSETS:

     Nonperforming/nonaccrual assets consist of loans on which interest is no
     longer accrued, loans which have been restructured in order to allow the
     borrower the ability to maintain control of the collateral, real estate
     acquired by foreclosure and real estate upon which deeds in lieu of
     foreclosure have been accepted. Interest previously accrued but not
     collected on nonaccrual loans is reversed against current income when a
     loan is placed on a nonaccrual basis. Nonaccrual loans are restored to
     accrual status when all delinquent principal and interest become less than
     90 days past due unless management determines the loan should remain on
     nonaccrual status.


                                       36

<PAGE>

     LOANS AND LEASES RECEIVABLE:

     Loans and leases receivable that management has the intent and ability to
     hold for the foreseeable future or until maturity or payoff are reported at
     their outstanding unpaid principal balances reduced by any charge-offs or
     specific valuation accounts and net of any deferred fees or costs on
     originated loans, or unamortized premiums or discounts on purchased loans.

     LOAN ORIGINATION FEES AND COSTS:

     Loan origination fees, net of certain direct costs of originating loans are
     being deferred and recognized over the contractual life of the loan as an
     adjustment of the yield on the related loan.

     PREMISES AND EQUIPMENT:

     Premises and equipment are carried at cost less accumulated depreciation.
     Depreciation is calculated on both straight-line and accelerated methods
     over the estimated useful lives of 5 to 50 years for buildings and
     improvements, 10 to 20 years for land improvements, 5 years for bank owned
     automobiles and 3 to 40 years for equipment. Computer software is being
     amortized over 3 years. Maintenance and repairs are charged to operating
     expenses as incurred.

     INCOME TAXES:

     Deferred tax assets or liabilities are computed based on the difference
     between the financial statement and income tax bases of assets and
     liabilities using the enacted marginal tax rate. Deferred income tax
     expenses or credits are based on the changes in the asset or liability from
     period to period.

     PENSION PLAN:

     Pension plan costs are funded by annual contributions as required by
     applicable regulations.

     CASH AND CASH EQUIVALENTS:

     For purposes of the Consolidated Statements of Cash Flows, cash and cash
     equivalents include all highly liquid debt instruments purchased with a
     maturity of three months or less except for federal funds sold. Those
     amounts are included in the balance sheet captions "Cash and Due From
     Banks." Included in "Cash and Due From Banks" are interest bearing deposits
     with FHLB in the amount of $3,118 and $207,835 at December 31, 2006 and
     2005, respectively.

     EARNINGS AND DIVIDENDS PER SHARE:

     Basic earnings and dividends per share are computed on the basis of the
     weighted average number of 458,048 shares of common stock outstanding in
     2006, 2005 and 2004.

     OFF-BALANCE SHEET FINANCIAL INSTRUMENTS:

     In the ordinary course of business, CNB has entered into off-balance sheet
     financial instruments consisting of commitments to extend credit,
     commercial lines of credit and letters of credit. Such financial
     instruments are recorded in the financial statements when they become due
     or payable.

     POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS:

     Postretirement insurance benefits are provided to selected officers and
     employees. During the years that the employee renders the necessary
     service, the Bank accrues the cost of providing postretirement health and
     life insurance benefits to the employee.

     FORECLOSED REAL ESTATE:

     Real estate properties acquired through, or in lieu of, loan foreclosure
     are to be sold and are initially recorded at fair value at the date of
     foreclosure, establishing a new cost basis. After foreclosure, valuations
     are periodically performed by management and the real estate is carried at
     the lower of carrying amount or fair value less estimated cost to sell.
     Revenue and expenses from operations and changes in the valuation allowance
     are included in loss on foreclosed real estate. The historical average
     holding period for such properties is twelve to eighteen months.

     TRUST ASSETS:

     Assets held by CNB in a fiduciary or agency capacity are not included in
     the consolidated financial statements since such assets are not assets of
     CNB. In accordance with banking industry practice, income from fiduciary
     activities is generally recognized on the cash basis which is not
     significantly different from amounts that would have been recognized on the
     accrual basis.

     ADVERTISING COSTS:

     The Company expenses advertising costs in the period in which they are
     incurred. Advertising costs amounted to $173,792, $161,180 and $213,357 for
     the years ended December 31, 2006, 2005 and 2004, respectively.

     COMPREHENSIVE INCOME:

     Comprehensive income is defined as the change in equity from transactions
     and other events from nonowner sources. It includes all changes in equity
     except those resulting from investments by shareholders and distributions
     to shareholders. Comprehensive


                                       37

<PAGE>

     income includes net income and certain elements of "other comprehensive
     income" such as foreign currency translations; accounting for futures
     contracts; employers accounting for pensions; and accounting for certain
     investments in debt and equity securities.

     CNB has elected to report its comprehensive income in the Consolidated
     Statements of Changes in Shareholders' Equity. The elements of "other
     comprehensive income" that CNB has are the unrealized gains or losses on
     available for sale securities, additional minimum pension liability
     adjustment and unrecognized pension costs.

     The components of the change in "other comprehensive income" were as
     follows:

<TABLE>
<CAPTION>
                                                      2006        2005          2004
                                                   ---------   -----------   ---------
<S>                                                <C>         <C>           <C>
Additional pension liability adjustment
   arising during the year                         $(886,267)  $  (355,276)  $ (40,578)
Unrealized holding gains (losses) arising during
   the year                                          124,727    (1,155,548)    (36,438)
Reclassification adjustment for (gains) losses
   realized in net income                             37,271        16,165    (135,546)
                                                   ---------   -----------   ---------
Net unrealized holding gains
   (losses) before taxes                           $(724,269)  $(1,494,659)  $(212,562)
Tax effect                                           275,222       567,970      80,773
                                                   ---------   -----------   ---------
Net change                                         $(449,047)  $  (926,689)  $(131,789)
                                                   =========   ===========   =========
</TABLE>

     RECENTLY ISSUED ACCOUNTING STANDARDS

     On March 17, 2006, the Financial Accounting Standards Board ("FASB") issued
     Statement of Financial Accounting Standards ("SFAS") No. 156, "Accounting
     for Servicing of Financial Assets." The new Standard, which is an amendment
     to SFAS No. 140, will simplify the accounting for servicing assets and
     liabilities, such as those common with mortgage securitization activities.

     Specifically, the new Standard addresses the recognition and measurement of
     separately recognized servicing assets and liabilities and provides an
     approach to simplify efforts to obtain hedge-like (offset) accounting.

     The standard also:

          1.   Clarifies when an obligation to service financial assets should
               be separately recognized as a servicing asset or a servicing
               liability.

          2.   Requires that a separately recognized servicing asset or
               servicing liability be initially measured at fair value, if
               practicable.

          3.   Permits an entity with a separately recognized servicing asset or
               servicing liability to choose either of the following methods for
               subsequent measurement:

               a.   Amortization Method

               b.   Fair Value Method

     The new Standard is effective for all separately recognized servicing
     assets and liabilities acquired or issued after the beginning of an
     entity's fiscal year that begins after September 15, 2006, with early
     adoption permitted. CNB is in the process of determining whether this new
     pronouncement will have a material impact on their financial statements.

     In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements",
     which defines fair value, establishes a framework for measuring fair value
     under GAAP, and expands disclosures about fair value measurements. SFAS No.
     157 applies to other accounting pronouncements that require or permit fair
     value measurements. The new guidance is effective for financial statements
     issued for fiscal years beginning after November 15, 2007, and for interim
     periods within those fiscal years. CNB is currently evaluating the
     potential impact, if any, of the adoption of SFAS No. 157 on their
     consolidated financial position, results of operations and cash flows.

     On September 29, 2006, the FASB issued SFAS No. 158, "Employers' Accounting
     for Defined Benefit Pension and Other Postretirement Plans", which amends
     SFAS No. 87 and SFAS No. 106 to require recognition of the over funded or
     under funded status of pension and other postretirement benefit plans on
     the balance sheet. Under SFAS No. 158, gains and losses, prior service
     costs and credits, and any remaining transition amounts under SFAS No. 87
     and SFAS No. 106 that have not yet been recognized through net periodic
     benefit cost will be recognized in accumulated other comprehensive income,
     net of tax effects, until they are


                                       38

<PAGE>

     amortized as a component of net periodic cost. Under SFAS No. 158, the
     measurement date - the date at which the benefit obligation and plan assets
     is measured - is required to be the company's fiscal year end. The
     recognition requirements of SFAS No. 158 are effective for publicly held
     companies for fiscal years ending after December 15, 2006. CNB has
     implemented SFAS No. 158 effective December 31, 2006 with the exception of
     the measurement date requirement. This requirement is effective for fiscal
     years ending after December 15, 2008. CNB does not anticipate early
     adoption of the measurement date requirement.

     In July 2006, the FASB issued Interpretation No. 48 (FIN 48), "Accounting
     for Uncertainty in Income Taxes." FIN 48 clarifies the accounting for
     uncertainty in income taxes recognized in an enterprise's financial
     statements in accordance with SFAS No. 109, "Accounting for Income Taxes."
     FIN 48 prescribes a recognition threshold and measurement attributable for
     the financial statement recognition and measurement of a tax position taken
     or expected to be taken in a tax return. FIN 48 also provides guidance on
     derecognition, classification, interest and penalties, accounting in
     interim periods, disclosures and transitions. FIN 48 is effective for
     fiscal years beginning after December 15, 2006. CNB will adopt FIN 48 for
     the year beginning January 1, 2007 and is evaluating the impact on its
     financial statements.

     In September 2006, the Securities and Exchange Commission issued Staff
     Accounting Bulletin (SAB) 108, "Considering the Effects of Prior Year
     Misstatements when Quantifying Misstatements in Current Year Financial
     Statements." SAB 108 provides guidance on how prior year misstatements
     should be taken into consideration when quantifying misstatements in
     current year financial statements for purposes of determining whether the
     current year's financial statements are materially misstated. SAB 108 is
     effective for fiscal years ending on or after November 15, 2006. The
     adoption of SAB 108 is not expected to have a material impact on CNB's
     financial statements.

     In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
     Financial Assets and Financial Liabilities." The fair value option
     established by this SFAS permits all entities to choose to measure eligible
     items at fair value at specified election dates. A business entity shall
     report unrealized gains and losses on items for which the fair value option
     has been elected in earnings at each subsequent reporting date. This SFAS
     is effective for fiscal years beginning after November 15, 2007. Early
     adoption is permitted as of the fiscal year that begins before November 15,
     2007 provided the entity also elects to apply the provisions of SFAS No.
     157, "Fair Value Measurements." CNB is currently evaluating the potential
     impact, if any, of the adoption of SFAS No. 159 on their consolidated
     financial position, results of operations and cash flows.

NOTE 2. INVESTMENT IN LIMITED LIABILITY COMPANY

     In February 2001, CNB paid $5,000 to become a 50% member in a limited
     liability company, Morgan County Title Insurance Agency, LLC for the
     purpose of selling title insurance. In January 2003, the other two members
     in the limited liability company purchased a portion of CNB's membership
     making each member's share 33%. CNB accounts for their investment in Morgan
     County Title Insurance Agency, LLC as part of "Other Assets" using the
     equity method of accounting.

     The following represents the limited liability company's financial
     information:

                    MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                        STATEMENTS OF FINANCIAL CONDITION
                                   (UNAUDITED)
                           DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                               2006     2005
                              ------   ------
<S>                           <C>      <C>
ASSETS
   Cash                       $3,415   $4,356
                              ------   ------
      TOTAL ASSETS            $3,415   $4,356
                              ======   ======
MEMBERS' EQUITY               $3,415   $4,356
                              ------   ------
      TOTAL MEMBERS' EQUITY   $3,415   $4,356
                              ======   ======
</TABLE>


                                       39

<PAGE>

                    MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                              STATEMENTS OF INCOME
                                   (UNAUDITED)
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                             2006       2005       2004
                           --------   --------   --------
<S>                        <C>        <C>        <C>
INCOME
   Insurance commissions   $101,084   $122,148   $185,154
                           --------   --------   --------
      TOTAL INCOME         $101,084   $122,148   $185,154
                           --------   --------   --------
EXPENSES
   Management fees         $ 32,300   $ 37,500   $ 72,328
   Other expenses             6,725        874      8,806
                           --------   --------   --------
      TOTAL EXPENSES       $ 39,025   $ 38,374   $ 81,134
                           --------   --------   --------
      NET INCOME           $ 62,059   $ 83,774   $104,020
                           ========   ========   ========
</TABLE>

                    MORGAN COUNTY TITLE INSURANCE AGENCY, LLC
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                   2006       2005        2004
                                                 --------   --------   ---------
<S>                                              <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                       $ 62,059   $ 83,774   $ 104,020
                                                 --------   --------   ---------
   NET CASH PROVIDED BY OPERATING ACTIVITIES     $ 62,059   $ 83,774   $ 104,020
                                                 --------   --------   ---------
CASH FLOWS FROM FINANCING ACTIVITIES
   Profit and capital distributed                $(63,000)  $(85,500)  $(103,800)
                                                 --------   --------   ---------
      NET CASH (USED IN) FINANCING ACTIVITIES    $(63,000)  $(85,500)  $(103,800)
                                                 --------   --------   ---------
      NET INCREASE IN CASH AND CASH
         EQUIVALENTS                             $   (941)  $ (1,726)  $     220
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR      4,356      6,082       5,862
                                                 --------   --------   ---------
CASH AND CASH EQUIVALENTS AT END OF YEAR         $  3,415   $  4,356   $   6,082
                                                 ========   ========   =========
</TABLE>

NOTE 3. SECURITIES

     The amortized cost and estimated market value of debt securities at
     December 31, 2006 and 2005 by contractual maturity are shown below.
     Expected maturities will differ from contractual maturities because
     borrowers may have the right to call or prepay obligations with or without
     call or prepayment penalties.


                                       40
<PAGE>

Securities are summarized as follows:

<TABLE>
<CAPTION>
                                                                       2006                                WEIGHTED
                                           -----------------------------------------------------------     AVERAGE
                                                            GROSS           GROSS          ESTIMATED        TAX
                                            AMORTIZED    UNREALIZED       UNREALIZED         FAIR         EQUIVALENT
                                               COST         GAINS           LOSSES           VALUE          YIELD
                                           -----------   ----------       ----------      -----------     ----------
<S>                                        <C>           <C>                 <C>              <C>            <C>
Available for sale:
   U.S. Government agencies
      and corporations
      After 1 but within 5 years           $24,562,491     $    --       $  634,791       $23,927,700      4.17%
      After 5 but within 10 years            6,486,929       2,059           69,338         6,419,650      5.06
                                           -----------     -------       ----------       -----------
                                           $31,049,420     $ 2,059       $  704,129       $30,347,350      4.35%
                                           -----------     -------       ----------       -----------
   States and political subdivisions
      Within one year                      $   840,774     $    --       $    4,922       $   835,852      2.78%
      After 1 but within 5 years             1,850,578       3,003           34,366         1,819,215      3.24
      After 5 but within 10 years            9,527,281          10          162,575         9,364,716      3.50
                                           -----------     -------       ----------       -----------
                                           $12,218,633     $ 3,013       $  201,863       $12,019,783      3.41%
                                           -----------     -------       ----------       -----------
   Mortgage backed securities              $ 8,662,318     $ 6,841       $  162,957       $ 8,506,202      4.99%
                                           -----------     -------       ----------       -----------
Total securities available for sale        $51,930,371     $11,913       $1,068,949       $50,873,335      4.24%
                                           ===========     =======       ==========       ===========
Restricted:
   Federal Home Loan Bank stock            $ 1,753,000     $    --       $       --       $ 1,753,000      5.25%
                                           ===========     =======       ==========       ===========


</Table>

<TABLE>
<CAPTION>

                                                                         2005                             WEIGHTED
                                           --------------------------------------------------------------  AVERAGE
                                                             GROSS          GROSS           ESTIMATED        TAX
                                            AMORTIZED     UNREALIZED      UNREALIZED          FAIR        EQUIVALENT
                                              COST           GAINS          LOSSES            VALUE         YIELD
                                           -----------    -----------     -----------      -----------    ---------
<S>                                       <C>              <C>            <C>              <C>             <C>
Available for sale:
    U.S. Government agencies
      and corporations
      After 1 but within 5 years           $16,826,758      $   225      $   485,392      $16,341,591      4.10%
      After 5 but within 10 years           18,217,740         --            324,090       17,893,650      4.77
                                           -----------      -------      -----------      -----------
                                           $35,044,498      $   225      $   809,482      $34,235,241      4.45%
                                           -----------      -------      -----------      -----------

    States and political subdivisions
      After 1 but within 5 years           $ 2,641,897      $ 1,376      $    52,169      $ 2,591,104      3.04%
      After 5 but within 10 years            9,980,628        4,224          160,963        9,823,889      3.51
                                           -----------      -------      -----------      -----------
                                           $12,622,525      $ 5,600      $   213,132      $12,414,993      3.41%
                                           -----------      -------      -----------      -----------

    Mortgage backed securities             $ 8,746,228      $  --        $   202,246      $ 8,543,982      4.72%
                                           -----------      -------      -----------      -----------


Total securities available for sale        $56,413,251      $ 5,825      $ 1,224,860      $55,194,216      4.26%
                                           ===========      =======      ===========      ===========

Restricted:
    Federal Reserve Bank stock             $   138,650      $  --        $      --        $   138,650      6.00%
    Federal Home Loan Bank stock             1,669,900         --               --          1,669,900      3.00
                                           -----------      -------      -----------      -----------
Total restricted investments               $ 1,808,550      $  --        $      --        $ 1,808,550      3.23%
                                           ===========      ======      ===========      ===========

</TABLE>

     The carrying value of securities pledged to secure public deposits and for
     other purposes as required or permitted by law totaled $37,066,060 at
     December 31, 2006 and $40,610,746 at December 31, 2005.

     Proceeds from sales of securities available for sale (excluding maturities
     and calls) for the years ended December 31, 2006, 2005 and 2004 were
     $12,218,693, $37,026,097 and $6,391,436, respectively. Gross gains and
     (losses) of $27,291 and $(65,000) in 2006, $145,013 and $(161,178) in 2005,
     and $135,546 and $(0) in 2004 were realized on the respective sales.

     The following tables show our investments' gross unrealized losses and fair
     value, aggregated by investment category and length of time that individual
     securities have been in a continuous unrealized loss position, at December
     31, 2006 and 2005, respectively.


                                       41

<PAGE>

<TABLE>
<CAPTION>
                                                                        2006
                                   -----------------------------------------------------------------------------
                                     LESS THAN 12 MONTHS        12 MONTHS OR MORE                TOTAL
                                   -----------------------   ------------------------   ------------------------
                                      FAIR      UNREALIZED      FAIR       UNREALIZED      FAIR       UNREALIZED
DESCRIPTION OF SECURITIES             VALUE       LOSSES        VALUE        LOSSES        VALUE        LOSSES
-------------------------          ----------   ----------   -----------   ----------   -----------   ----------
<S>                                <C>          <C>          <C>           <C>          <C>           <C>
U.S. Government agencies
   and corporations                $        --   $     --     $29,352,749   $  704,129   $29,352,749   $  704,129
State and political subdivisions       985,973      5,087      10,415,625      196,776    11,401,598      201,863
Mortgage backed securities           1,235,741      1,581       6,402,302      161,376     7,638,043      162,957
                                   -----------   --------     -----------   ----------   -----------   ----------
Total temporarily impaired
   securities                      $ 2,221,714   $  6,668     $46,170,676   $1,062,281   $48,392,390   $1,068,949
                                   ===========   ========     ===========   ==========   ===========   ==========
</TABLE>

<TABLE>
<CAPTION>
                                                                        2005
                                   -----------------------------------------------------------------------------
                                     LESS THAN 12 MONTHS        12 MONTHS OR MORE                TOTAL
                                   -----------------------   ------------------------   ------------------------
                                      FAIR      UNREALIZED      FAIR       UNREALIZED      FAIR       UNREALIZED
DESCRIPTION OF SECURITIES             VALUE       LOSSES        VALUE        LOSSES        VALUE        LOSSES
-------------------------          ----------   ----------   -----------   ----------   -----------   ----------
<S>                                <C>          <C>          <C>           <C>          <C>           <C>
U.S. Government agencies
   and corporations                $18,797,616   $281,814     $13,938,525   $  527,668   $32,736,141   $  809,482

State and political subdivisions     9,722,997    134,731       2,531,396       78,401    12,254,393      213,132

Mortgage backed securities           4,418,522     69,934       4,125,462      132,312     8,543,984      202,246
                                   -----------   --------     -----------   ----------   -----------   ----------

Total temporarily impaired
   securities                      $32,939,135   $486,479     $20,595,383   $  738,381   $53,534,518   $1,224,860
                                   ===========   ========     ===========   ==========   ===========   ==========
</TABLE>




     Management evaluates securities for other-than-temporary impairment at
     least on a quarterly basis, and more frequently when economic or market
     concerns warrant such evaluation. Consideration is given to (1) the length
     of time and the extent to which the fair value has been less than cost, (2)
     the financial condition and near-term prospects of the issuer, and (3) the
     intent and ability of the bank to retain its investment in the issuer for a
     period of time sufficient to allow for any anticipated recovery in fair
     value.

     At December 31, 2006, there were 107 available for sale securities that
     have unrealized losses with aggregate depreciation of 2.2% from the
     securities amortized cost basis. The unrealized losses relate principally
     to government obligations. In analyzing the issuer's financial condition,
     management considers whether the securities are issued by the federal
     government or its agencies and whether downgrades by bond rating agencies
     have occurred. Since the securities are primarily government bonds or
     agency issues and management has the ability to hold the securities until
     maturity or until such a time that the market value has recovered the
     unrealized losses, management determined that no declines are deemed to be
     other-than-temporary.


                                       42

<PAGE>

NOTE 4. LOANS AND LEASES RECEIVABLE

     Major classifications of loans at December 31, 2006 and 2005 were as
     follows:

<TABLE>
<CAPTION>
                                     2006           2005
                                 ------------   ------------
<S>                              <C>            <C>
Loans:
   Real estate                   $143,766,546   $125,722,303
   Commercial real estate          36,966,855     29,492,744
   Consumer                        15,933,470     16,801,986
   Commercial                       9,172,160      9,314,491
   Overdrafts                         163,469        356,329
                                 ------------   ------------
                                 $206,002,500   $181,687,853
Leases:                               123,733        144,869
                                 ------------   ------------
                                 $206,126,233   $181,832,722
Net deferred loan fees, costs,
    premiums and discounts            324,283        396,798
Allowance for loan losses          (2,131,523)    (2,022,130)
                                 ------------   ------------
                                 $204,318,993   $180,207,390
                                 ============   ============
</TABLE>

     At December 31, 2006, approximately $93,841,000 or 51.9% of the real estate
     loans had fixed rates of interest and $86,893,000 or 48.1% had adjustable
     rates of interest.

     An analysis of the allowance for loan losses was as follows:

<TABLE>
<CAPTION>
                             2006         2005         2004
                          ----------   ----------   ----------
<S>                       <C>          <C>          <C>
Balance, beginning        $2,022,130   $1,807,449   $1,607,763
   Provision charged to
      operations             275,500      352,000      393,000
   Recoveries                151,513      168,413      158,850
   Loans charged off        (317,620)    (305,732)    (352,164)
                          ----------   ----------   ----------
Balance, ending           $2,131,523   $2,022,130   $1,807,449
                          ==========   ==========   ==========
</TABLE>

     Loans are placed on nonaccrual status at the time the loan becomes 90 days
     past due, unless in management's judgment collectibility is assured. A
     summary of nonperforming loans is as follows:

<TABLE>
<CAPTION>
                                           DECEMBER 31,
                                       -------------------
                                         2006       2005
                                       --------   --------
<S>                                    <C>        <C>
Nonaccrual  loans                      $402,014   $789,684
Loans past due 90 days or more still
   accruing interest                      4,942         --
                                       --------   --------
   Total                               $406,956   $789,684
                                       ========   ========
</TABLE>

     The contractual amount of interest that would have been recorded on
     nonaccrual loans during 2006 and 2005 was $19,455 and $48,044,
     respectively. The amount of interest income that was recorded on nonaccrual
     loans during 2006 and 2005 was $19,549 and $20,832, respectively.

     The Bank is not committed to lend additional funds to debtors whose loans
     are nonperforming or on nonaccrual status.

     The Bank has no loans which are considered to be impaired at December 31,
     2006 and 2005.


                                       43

<PAGE>

NOTE 5. LOAN SERVICING

     Mortgage loans serviced for others are not included in the accompanying
     financial statements. The unpaid principal balances of mortgage loans
     serviced for others were $3,610,043 and $3,670,323 at December 31, 2006 and
     2005, respectively.

     Custodial balances maintained in connection with the foregoing loan
     servicing, and included in demand deposits, were $16,080 and $48,288 at
     December 31, 2006 and 2005, respectively.

     The Bank did not capitalize any mortgage servicing rights in 2006, 2005 or
     2004. Amortization of mortgage servicing rights was $0 in 2006, 2005 and
     2004, respectively. There were no mortgage servicing rights at December 31,
     2006 and 2005.

NOTE 6. PREMISES AND EQUIPMENT

     Major classifications of premises and equipment at December 31 were as
     follows:

<TABLE>
<CAPTION>
                                          2006         2005
                                       ----------   ----------
<S>                                    <C>          <C>
Land and land improvements             $2,072,388   $2,072,388
Banking house - Main                    1,504,751    1,491,251
Banking house - Valley Road branch        547,936      547,936
Banking house - Hedgesville branch        770,643      766,743
Banking house - Martinsburg branch        697,006      697,006
Banking house - Hancock branch            230,999      230,999
Banking house - Spring Mills branch       885,697      882,844
Bank owned automobiles                     41,657       37,228
Furniture, fixtures and equipment       2,889,032    2,848,095
                                       ----------   ----------
                                       $9,640,109   $9,574,490
   Less accumulated depreciation        3,312,815    2,973,027
                                       ----------   ----------
                                       $6,327,294   $6,601,463
                                       ==========   ==========
</TABLE>

     Depreciation expense amounted to $505,421, $462,198 and $370,056 in 2006,
     2005 and 2004, respectively.

     The Bank purchased a parcel of land in Falling Waters, Berkeley County,
     West Virginia on December 15, 2003 for $503,261 to construct a new branch
     facility. Construction on the new branch facility began in August 2004 and
     was completed in April 2005. On April 27, 2005, the new branch building
     opened.

     Computer software, net of accumulated amortization, included in the
     statement of financial condition caption "Other Assets" amounted to
     $101,733 and $167,212 at December 31, 2006 and 2005, respectively.
     Amortization expense on computer software amounted to $89,887, $253,744 and
     $255,518 in 2006, 2005 and 2004, respectively.

NOTE 7. INTANGIBLE ASSETS

     Amortized intangible assets representing customer lists, contracts and
     records acquired by CNB Insurance Services, Inc. had a carrying amount of
     $66,267 and accumulated amortization of $54,370 at December 31, 2005. On
     June 1, 2006, CNB Insurance Services, Inc. was sold along with its customer
     lists which had a remaining unamortized cost of $9,419. See Note 16:
     Discontinued Operations in the Notes to Consolidated Financial Statements
     for further discussion on the sale. These intangibles were being amortized
     on a straight line basis.

     Amortized intangible asset representing the $780,616 premium from the
     purchase of core deposit relationships as part of the Hancock branch
     acquisition has accumulated amortization of $283,438 and $171,921 at
     December 31, 2006 and 2005, respectively. This core deposit intangible
     asset from the Hancock branch acquisition is being amortized over seven
     years on a straight line basis.

     Amortization expense on intangible assets amounted to $113,995, $117,465
     and $66,354 in 2006, 2005 and 2004, respectively.

     The estimated amortization expense for the next five succeeding years will
     be:


                                       44

<PAGE>

<TABLE>
<S>    <C>
2007   $111,516
2008   $111,516
2009   $111,516
2010   $111,516
2011   $ 51,114
</TABLE>

NOTE 9. TIME DEPOSITS

     At December 31, 2006, the scheduled maturities of time deposits are as
     follows:

<TABLE>
<CAPTION>
         TIME DEPOSITS       ALL TIME
       $100,000 AND OVER     DEPOSITS
       -----------------   ------------
<S>    <C>                 <C>
2007      $14,844,280        42,648,255
2008       14,067,636        37,953,126
2009        6,382,727        19,277,922
2010        1,027,329         5,173,594
2011        1,438,227         5,179,966
          -----------      ------------
          $37,760,199      $110,232,863
          ===========      ============
</TABLE>

NOTE 9. FEDERAL HOME LOAN BANK BORROWINGS

<TABLE>
<CAPTION>
                                         DECEMBER 31,
                                  -------------------------
                                     2006          2005
                                  -----------   -----------
<S>                               <C>           <C>
Federal Home Loan Bank advances   $18,500,000   $17,800,000
</TABLE>

     CNB Bank, Inc. is a member of the Federal Home Loan Bank of Pittsburgh
     ("FHLB") and, as such, can take advantage of the FHLB program for overnight
     and term advances at published daily rates. At December 31, 2006, the Bank
     only has term advances with FHLB. FHLB term advances mature within one year
     and carry an interest rate of 5.4% at December 31, 2006. Under the terms of
     a blanket collateral agreement, term advances from the FHLB are
     collateralized by qualifying mortgages and U.S. Government agencies and
     mortgage-backed securities. In addition, all of the Bank's stock in the
     FHLB is pledged as collateral for such debt. Term advances available under
     this agreement are limited by available and qualifying collateral and the
     amount of FHLB stock held by the borrower.

<TABLE>
<CAPTION>
                                         2006          2005
                                      -----------   -----------
<S>                                   <C>           <C>
Maximum balance outstanding           $27,500,000   $17,800,000
   at any month-end during the year
Average balance for the year           18,730,712     8,212,740
Weighted average rate for the year           5.13%        3.55%
Weighted average rate at year-end            5.40%        4.20%
</TABLE>

NOTE 10. UNUSED LINES OF CREDIT

     The Bank entered into an open-ended unsecured line of credit with
     Mercantile Safe Deposit and Trust Company for $3,000,000 for federal fund
     purchases. Funds issued under this agreement are at the Mercantile Safe
     Deposit and Trust Company federal funds rate effective at the time of
     borrowing. The line matures October 4, 2007 and has a compensating balance
     requirement of $250,000. The Bank had not drawn on these funds at December
     31, 2006. The Bank entered into a line of credit with SunTrust Bank for


                                       45
<PAGE>

     $4,500,000 for federal fund purchases. Funds issued under this agreement
     are at the SunTrust Bank federal funds rate effective at the time of
     borrowing. The Bank had not drawn on these funds at December 31, 2006.

NOTE 11. PENSION PLAN

     The Bank is a member of The West Virginia Bankers Association Retirement
     Plan, a multi-employer, defined benefit pension plan. All employees
     participate in the plan after completing one year of service and attaining
     the age of 21. The benefits are based on years of service and the highest
     average earnings during any five consecutive calendar years. Plan assets
     are invested primarily in corporate bonds, common stocks and U.S.
     Government and Agency Securities.

     The following table sets forth information about the Bank's plan as of
     October 31:

<TABLE>
<CAPTION>
                                                            2006          2005         2004
                                                        -----------   -----------   ----------
<S>                                                     <C>           <C>           <C>
Change in benefit obligation:
   Benefit obligation at
      beginning of year                                 $ 4,186,024   $ 3,423,734   $3,269,219
   Adjustment for plan changes                                   --       106,789           --
   Service cost                                             232,392       162,067      144,323
   Interest cost                                            248,471       229,400      200,152
   Actuarial (gain) loss                                    346,984       428,791       47,693
   Benefits paid                                           (154,189)     (164,757)    (237,653)
                                                        -----------   -----------   ----------
   Benefit obligation at end of
      year                                              $ 4,859,682   $ 4,186,024   $3,423,734
                                                        -----------   -----------   ----------
CHANGE IN PLAN ASSETS:
   Fair value of plan assets at
      beginning of year                                 $ 2,760,085   $ 2,427,640   $2,246,999
   Actual return on plan assets                             346,212       212,052      198,364
   Employer contribution                                    413,170       285,150      249,348
   Administrative expenses                                       --            --      (29,418)
   Benefits paid                                           (154,189)     (164,757)    (237,653)
                                                        -----------   -----------   ----------
   Fair value of plan assets
      at end of year                                    $ 3,365,278   $ 2,760,085   $2,427,640
                                                        -----------   -----------   ----------
Funded status                                           $(1,494,404)  $(1,425,939)  $ (996,094)
Unrecognized net actuarial
   (gain) loss                                            1,578,504     1,464,092    1,054,208
Unrecognized prior service
   cost                                                     139,910        98,574           --
                                                        -----------   -----------   ----------
   Prepaid (accrued) benefit cost                       $   224,010   $   136,727   $   58,114
                                                        ===========   ===========   ==========
ADDITIONAL INFORMATION
Increase (decrease) in minimum liability included
   in other comprehensive income (prior to adjustment
   to implement SFAS No. 158)                           $  (122,863)  $   355,276   $   40,578
</TABLE>


                                       46

<PAGE>

<TABLE>
<CAPTION>
                                                                2006         2005        2004
                                                            -----------   ---------   ---------
<S>                                                         <C>           <C>         <C>
WEIGHTED AVERAGE ASSUMPTIONS USED TO
   DETERMINE BENEFIT OBLIGATIONS AS OF OCTOBER 31:
      Discount rate                                                5.75%       5.75%        6.5%
      Expected return on plan
         assets                                                     8.0%        8.5%        8.5%
      Rate of compensation increase                                 3.5%        3.0%        3.5%
WEIGHTED AVERAGE ASSUMPTIONS USED TO DETERMINE
   NET PERIODIC BENEFIT COST FOR YEARS ENDED OCTOBER 31:
      Discount rate                                                5.75%        6.5%        6.5%
      Expected return on plan
         assets                                                     8.5%        8.5%        8.5%
      Rate of compensation increase                                 3.0%        3.5%        3.5%
AMOUNTS RECOGNIZED IN THE STATEMENT OF FINANCIAL POSITION
   CONSIST OF:
      Accrued benefit cost                                  $(1,494,404)  $(793,994)  $(418,757)
      Intangible assets                                              --      98,574          --
      Accumulated other comprehensive income                  1,718,414     832,147     476,871
                                                            -----------   ---------   ---------
      Net amount recognized                                 $   224,010   $ 136,727   $  58,114
                                                            ===========   =========   =========
</TABLE>

The accumulated benefit obligation for the defined benefit pension plan was
$3,990,462 and $3,554,079 at October 31, 2006 and October 31, 2005,
respectively.

<TABLE>
<S>                                      <C>         <C>         <C>
COMPONENTS OF NET PERIODIC COST:
   Service cost                          $ 232,392   $ 162,067   $ 136,170
   Interest cost                           248,471     229,400     207,304
   Expected return on plan assets         (248,419)   (230,617)   (224,567)
   Amortization of prior service costs      12,344       8,215       2,753
   Recognized net actuarial loss            81,099      37,472      18,736
                                         ---------   ---------   ---------
      Net periodic plan cost             $ 325,887   $ 206,537   $ 140,396
                                         =========   =========   =========
</TABLE>

                   INCREMENTAL EFFECT OF APPLYING SFAS NO. 158
         ON INDIVIDUAL LINE ITEMS IN THE STATEMENT OF FINANCIAL POSITION
                                DECEMBER 31, 2006

<TABLE>
<CAPTION>
                                 BEFORE                          AFTER
                             APPLICATION OF                 APPLICATION OF
                              SFAS NO. 158    ADJUSTMENTS    SFAS NO. 158
                             --------------   -----------   --------------
<S>                          <C>              <C>           <C>
Intangible asset              $    139,910     $(139,910)    $         --
Deferred tax asset            $    269,528     $ 383,469     $    652,997
Total assets                  $275,824,982     $ 243,559     $276,068,541

Pension liability             $    625,184     $ 869,220     $  1,494,404
Total liabilities             $254,877,059     $ 869,220     $255,746,279

Total OCI - pension           $   (439,756)    $(625,661)    $ (1,065,417)
Total stockholders' equity    $ 20,947,923     $(625,661)    $ 20,322,262
</TABLE>


                                       47

<PAGE>

PLAN ASSETS

<TABLE>
<CAPTION>
                                                  PERCENTAGE
                                                   OF PLAN
                                                  ASSETS AT
                         TARGET     ALLOWABLE    OCTOBER 31,
                       ALLOCATION   ALLOCATION   -----------
                          2006         RANGE     2006   2005
                       ----------   ----------   ----   ----
<S>                    <C>          <C>          <C>    <C>
Plan assets
   Equity securities       75%       40 - 80%     74%    73%
   Debt securities         25%       20 - 40%     20%    22%
   Real estate              0%             0%      0%     0%
   Other                    0%         3 -10%      6%     5%
                                                 ---    ---
   Total                                         100%   100%
                                                 ===    ===
</TABLE>

     INVESTMENT POLICY AND STRATEGY

     The policy, as established by the Pension Committee, is to invest in assets
     per the target allocations stated above. The assets will be reallocated
     periodically to meet the above target allocations. The investment policy
     will be reviewed periodically, under the advisement of a certified
     investment advisor, to determine if the policy should be changed.

     The overall investment return goal is to achieve a return greater than a
     blended mix of stated indices tailored to the same asset mix of the plan
     assets by 0.5% after fees over a rolling 5-year moving average basis.

     Allowable assets include cash equivalents, fixed income securities, equity
     securities, exchange traded index funds and GICs. Prohibited investments
     include, but are not limited to, commodities and future contracts, private
     placements, options, limited partnerships, venture capital investments,
     real estate and IO, PO, and residual tranche CMOs. Unless a specific
     derivative security is allowed per the plan document, permission must be
     sought from the Pension Committee to include such investments.

     In order to achieve a prudent level of portfolio diversification, the
     securities of any one company should not exceed more than 10% of the total
     plan assets, and no more than the 25% of total plan assets should be
     invested in any one industry (other than securities of U.S. Government or
     agencies). Additionally, no more than 20% of the plan assets shall be
     invested in foreign securities (both equity and fixed).


                                       48

<PAGE>

     DETERMINATION OF EXPECTED LONG-TERM RATE OF RETURN

     The expected long-term rate of return for the plan's total assets is based
     on the expected return of each of the above categories, weighted based on
     the median of the target allocation for each class.

<TABLE>
<S>                                                              <C>
CASH FLOWS
Expected contributions for fiscal year ending October 31, 2007
      Expected employer contributions                            $  421,380
      Expected employee contributions                            $       --
Estimated future benefit payments reflecting expected
   future service for the fiscal year(s) ending
      10/31/2007                                                 $  172,646
      10/31/2008                                                 $  188,972
      10/31/2009                                                 $  199,024
      10/31/2010                                                 $  203,169
      10/31/2011                                                 $  206,634
      10/31/2012 - 10/31/2016                                    $1,167,544
</TABLE>

NOTE 12. 401(K) PROFIT SHARING PLAN

     All employees are eligible to participate in the Bank's 401(k) Profit
     Sharing Plan after completing one year of service. Employees may defer up
     to 15% of their salary in 2006, 2005 and 2004. The Bank may, at the
     discretion of the Board of Directors, match all or part of the employee
     deferrals. For 2006, 2005 and 2004, the Bank matched 75% of employee
     deferrals up to 5% of salary. The percentage of match varies based on the
     Bank's profit level. The assets of the 401(k) Profit Sharing Plan are
     managed by the Bank's trust department.

     The Bank's contribution charged to income during 2006, 2005 and 2004 was
     $64,750, $63,789 and $53,783, respectively.

NOTE 13. DEFERRED COMPENSATION PLAN

     The Bank has a plan pursuant to which a director may elect to waive receipt
     of all or a portion of his fees for Board of Directors' meetings or
     committee meetings in exchange for a retirement benefit to be received
     during a ten-year period after attaining a certain age. The Bank has
     acquired life insurance on the lives of participating directors to fund its
     obligation under the plan. The cash surrender value of these life insurance
     policies has been recorded as an asset. The present value of payments to be
     paid to directors or their beneficiaries for services rendered to date has
     been recorded as a liability. The net expense for these benefits was
     $21,641, $17,948 and $17,702 for 2006, 2005 and 2004, respectively.


                                       49
<PAGE>

NOTE 14. INCOME TAXES

     Income taxes reflected in the statements of income are as follows:

<TABLE>
<CAPTION>
                                        YEARS ENDED DECEMBER 31,
                                   ----------------------------------
                                      2006         2005        2004
                                   ----------   ----------   --------
<S>                                <C>          <C>          <C>
Federal:
   Current                         $1,194,270   $1,154,256   $942,169
   Deferred                           (39,537)     (68,049)   (67,864)
State:
   Current                            161,659      163,560    128,886
   Deferred                            (7,813)     (11,351)   (11,274)
                                   ----------   ----------   --------
      Provision for income taxes   $1,308,579   $1,238,416   $991,917
                                   ==========   ==========   ========
</TABLE>

     Deferred income taxes reflect the impact of "temporary differences" between
     the amount of assets and liabilities for financial reporting purposes and
     such amounts as measured by tax laws and regulations.

     The following is a reconciliation of the statutory federal income tax rate
     applied to pre-tax accounting income, with the income tax provisions in the
     statements of income.

<TABLE>
<CAPTION>
                                                YEARS ENDED DECEMBER 31,
                                          ------------------------------------
                                             2006         2005         2004
                                          ----------   ----------   ----------
<S>                                       <C>          <C>          <C>
Income tax expense at the
   statutory rate (34%)                   $1,284,262   $1,252,558   $1,134,107
Increases (decreases) resulting
   from:
      Nontaxable interest income,
         net of non-deductible interest
         expense                            (120,442)    (164,735)    (121,892)
     State income taxes, net of
         federal income tax benefit          104,293       91,908       83,217
     Other                                    40,465       58,685     (103,515)
                                          ----------   ----------   ----------
        Provision for income taxes        $1,308,578   $1,238,416   $  991,917
                                          ==========   ==========   ==========
</TABLE>

     Federal and state income taxes receivable included in the balance sheet as
     other assets was $242,662 and $212,091 at December 31, 2006 and 2005,
     respectively.

     The components of deferred taxes included in the statement of financial
     condition as of December 31 are as follows:


                                       50

<PAGE>

<TABLE>
<CAPTION>
                                             2006         2005
                                          ----------   ----------
<S>                                       <C>          <C>
Deferred tax assets:
   Provision for loan losses              $  702,985   $  663,605
   Deferred compensation plan                307,424      276,713
   Postretirement benefits                    67,522       64,306
   Intangible asset                           54,420       54,081
   Minimum pension liability adjustment           --      316,216
   Unrecognized pension costs                652,997           --
   Severence package                           2,592           --
   Net unrealized loss on securities
      available for sale                     401,674      463,233
                                          ----------   ----------
                                          $2,189,614   $1,838,154
                                          ----------   ----------
Deferred tax liabilities:
   CSV life insurance                     $ (278,904)  $ (255,938)
   Defined benefit plan                      (80,643)     (49,222)
   Depreciation                             (347,901)    (373,399)
                                          ----------   ----------
                                          $ (707,448)  $ (678,559)
                                          ----------   ----------
Net deferred tax asset (liability)        $1,482,166   $1,159,595
                                          ==========   ==========
</TABLE>

     Generally accepted accounting principles require a valuation allowance
     against deferred tax assets if, based on the weight of available evidence,
     it is more likely than not that some or all of the deferred tax assets will
     not be realized. The Bank believes that the deferred tax assets will be
     realized and therefore no valuation allowance was established.

NOTE 15. OTHER OPERATING EXPENSES

<TABLE>
<CAPTION>
                                          YEARS ENDED DECEMBER 31,
                                    ------------------------------------
                                       2006         2005         2004
                                    ----------   ----------   ----------
<S>                                 <C>          <C>          <C>
Stationery, supplies and printing   $  245,038   $  206,124   $  240,711
Data processing                        116,177      132,595      134,100
Director's fees                        205,125      178,375      178,650
Postage                                124,099      132,363      129,122
Telephone                              102,854      104,249       88,985
Professional fees                      325,939      297,449      252,160
ATM and debit card fees                215,218      222,539      188,147
Advertising                            173,792      161,180      213,357
Amortization of intangible             111,516      371,209      321,872
Other                                  494,518      252,997      235,259
                                    ----------   ----------   ----------
   Total other operating expenses   $2,114,276   $2,059,080   $1,982,363
                                    ==========   ==========   ==========
</TABLE>

NOTE 16. DISCONTINUED OPERATIONS

     On April 27, 2006, CNB Insurance Services, Inc., a wholly-owned subsidiary
     of CNB Bank, Inc., which is a wholly-owned subsidiary of CNB Financial
     Services, Inc., entered into an agreement with Maiden Financial Inc. Under
     the terms of the agreement, CNB Insurance Services, Inc. sold to Maiden
     Financial Inc. certain assets constituting CNB Insurance Services, Inc.'s
     insurance business for a purchase price of $153,332 on June 1, 2006
     resulting in a gain on sale of $143,913.


                                       51

<PAGE>

     The following table summarizes the net results of the discontinued
     operations of CNB Insurance Services, Inc.:

<TABLE>
<CAPTION>
                                                                       2006
                                               ----------------------------------------------------
                                                FIRST     SECOND     THIRD     FOURTH    YEAR ENDED
                                               QUARTER    QUARTER   QUARTER   QUARTER   DECEMBER 31
                                               -------   --------   -------   -------   -----------
<S>                                            <C>       <C>        <C>       <C>       <C>
Net income (loss) from operations
of CNB Insurance Services, Inc.                 $2,354   $(22,404)   $(58)    $   352     $(19,756)
Gain on sale of CNB Insurance Services, Inc.        --    143,913      --          --      143,913
                                                ------   --------    ----     -------     --------
Net Income before taxes                         $2,354   $121,509    $(58)    $   352     $124,157
Taxes                                              902     42,595      --       1,956       45,453
                                                ------   --------    ----     -------     --------
Net income (loss)                               $1,452   $ 78,914    $(58)    $(1,604)    $ 78,704
                                                ======   ========    ====     =======     ========
</TABLE>

NOTE 17. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

     CNB is a party to financial instruments with off-balance-sheet risk in the
     normal course of business to meet the financing needs of its customers.
     These financial instruments include commitments to extend credit, and
     standby letters of credit. Those instruments involve, to varying degrees,
     elements of credit and interest rate risk which are not reflected in the
     statements of financial condition. The contractual amounts of those
     instruments reflect the extent of involvement CNB has in particular classes
     of financial instruments.

     CNB's exposure to credit loss in the event of nonperformance by the other
     party to the financial instrument for commitments to extend credit and
     standby letters of credit written is represented by the contractual amount
     of those instruments. CNB uses the same credit policies in making
     commitments and conditional obligations as it does for on-balance-sheet
     instruments.

     Commitments to extend credit are agreements to lend funds as long as there
     is no violation of any condition established in the contract. Commitments
     generally have fixed expiration dates or other termination clauses.
     Commercial line of credit arrangements usually require payment of a fee.

     CNB evaluates each customer's creditworthiness and related collateral on a
     case-by-case basis. The amount of collateral obtained if deemed necessary
     by CNB upon extension of credit is based on management's credit evaluation
     of the customer. Collateral held varies but may include accounts
     receivable, inventory, real estate, equipment and income-producing
     commercial properties.

     Standby letters of credit written are conditional commitments issued by CNB
     to guarantee the performance of a customer to a third party. Those
     guarantees are issued to support public and private borrowing arrangements,
     bond financing and similar transactions. The credit risk involved in
     issuing a letter of credit is essentially the same as that involved in
     extending loan facilities to customers.

     A summary of off-balance sheet instruments as of December 31 is as follows:


                                       52

<PAGE>

<TABLE>
<CAPTION>
                                               2006          2005
                                           -----------   -----------
<S>                                        <C>           <C>
Commitments
   to originate:
   Fixed rate loans                        $ 1,103,253   $ 2,697,280
   Adjustable rate loans                     1,619,100     2,396,328
                                           -----------   -----------
                                           $ 2,722,353   $ 5,093,608
Letters of credit                            1,022,059     1,990,600
Undisbursed portion of construction
   loans                                    11,188,752     3,689,992
Available credit granted on commercial
   loans                                    10,479,484    10,213,982
Available credit on personal lines
   of credit                                   280,198       296,856
Undisbursed portion of home equity loans     4,270,602     3,743,253
                                           -----------   -----------
                                           $29,963,448   $25,028,291
                                           ===========   ===========
</TABLE>

NOTE 18. SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK

     CNB's primary business is mortgage loans, which consists of originating
     residential, construction, multi-family and commercial real estate loans
     and consumer and commercial loans. CNB's primary lending area is Morgan and
     Berkeley Counties, West Virginia and Washington County, Maryland. Loans are
     occasionally made in surrounding counties in West Virginia, Maryland,
     Virginia and Pennsylvania.

     CNB evaluates each customer's creditworthiness on a case-by-case basis. The
     amount of collateral obtained if deemed necessary by CNB upon the extension
     of credit is based on management's credit evaluation of the customer.
     Collateral held varies but generally includes vehicles, equipment and real
     estate.

     The Company maintains substantial balances of cash on hand, federal funds
     sold and investments held in safekeeping at corresponding banks. The
     balances held at the correspondent banks are in excess of the Federal
     Deposit Insurance Corporation insurance limit. Management considers this to
     be a normal business risk.

NOTE 19. LEGAL CONTINGENCIES

     Various legal claims arise from time to time in the normal course of
     business which, in the opinion of management, will have no material effect
     on the bank's consolidated financial statements.

NOTE 20. REGULATORY MATTERS

     The primary source of funds for the dividends paid by CNB Financial
     Services, Inc. is dividends received from its banking subsidiary. The
     payment of dividends by banking subsidiaries is subject to various banking
     regulations. The most restrictive provision requires regulatory approval if
     dividends declared in any calendar year exceed the total net profits, as
     defined, of that year plus the retained net profits, as defined, of the
     preceding two years. At January 1, 2007, CNB has $5,966,000 available for
     dividends.

     The Bank is subject to various regulatory capital requirements administered
     by the banking regulatory agencies. Pursuant to capital adequacy
     guidelines, the Bank must meet specific capital guidelines that involve
     various quantitative measures of the banks' assets, liabilities, and
     certain off-balance-sheet items as calculated under regulatory accounting
     practices. The Bank's capital amounts and classifications are also subject
     to qualitative judgments by the regulators about components, risk
     weightings and other factors.

     Quantitative measures established by regulation to ensure capital adequacy
     require the Bank to maintain minimum amounts and ratios of total and Tier I
     capital to risk-weighted assets (as defined), and of Tier I capital (as
     defined) to average assets (as defined). Management believes, as of
     December 31, 2006, that the Bank meets all capital adequacy requirements to
     which it is subject.

     As of December 31, 2006 and 2005, the most recent notification from the
     banking regulatory agencies categorized the Bank as well-capitalized under
     the regulatory framework for prompt corrective action. To be categorized as
     well-capitalized, the Bank must maintain minimum total risk-based, Tier I
     risk-based, and Tier I leverage ratios. There are no conditions or events
     since that notification that management believes have changed the
     institution's category.

     The Bank's actual capital amounts and ratios are presented in the table.


                                       53
<PAGE>

<TABLE>
<CAPTION>
                                                              RATIO
                                         ----------------------------------------------
                               ACTUAL                                    TO BE WELL
                               AMOUNT                                 CAPITALIZED UNDER
                                 IN                  FOR CAPITAL      PROMPT CORRECTIVE
                             THOUSANDS   ACTUAL   ADEQUACY PURPOSES   ACTION PROVISIONS
                             ---------   ------   -----------------   -----------------
<S>                          <C>         <C>      <C>                 <C>
As of December 31, 2006:
   Total Capital
      (to Risk Weighted
       Assets)                $22,295    13.29%          8.0%               10.0%
   Tier I Capital
      (to Risk Weighted
      Assets)                 $20,198    12.04%          4.0%                6.0%
   Tier I Capital
      (to Average Assets)     $20,198     7.34%          4.0%                5.0%

As of December 31, 2005:
   Total Capital
      (to Risk Weighted
       Assets)                $21,066    13.68%          8.0%               10.0%
   Tier I Capital
      (to Risk Weighted
      Assets)                 $19,140    12.43%          4.0%                6.0%
   Tier I Capital
      (to Average Assets)     $19,140     7.49%          4.0%                5.0%
</TABLE>

NOTE 21. REGULATORY RESTRICTIONS

     Included in Cash and Due From Banks are average daily reserve balances the
     Bank is required to maintain with the Federal Reserve Bank. The amount of
     these required reserves, calculated based on percentages of certain deposit
     balances was $4.9 million at December 31, 2006.

     Certain regulations prohibit the transfer of funds from the Bank to
     affiliates in the form of loans or advances exceeding 10% of its capital
     stock and surplus. In addition, all loans or advances to nonbank affiliates
     must be secured by specific collateral. Based on this limitation, there was
     approximately $2,204,000 available for loans or advances to affiliates of
     the Bank as of December 31, 2006, at which time there were no material
     loans or advances outstanding.

NOTE 22. FAIR VALUE OF FINANCIAL INSTRUMENTS

     The fair value of financial instruments is the amount at which the asset or
     obligation could be exchanged in a current transaction between willing
     parties, other than in a forced or liquidation sale. Fair value estimates
     are made at a specific point in time based on relevant market information
     and information about the financial instrument. These estimates do not
     reflect any premium or discount that could result from offering for sale at
     one time the entire holdings of a particular financial instrument. Because
     no market value exists for a significant portion of the financial
     instruments, fair value estimates are based on judgments regarding future
     expected loss experience, current economic conditions, risk characteristics
     of various financial instruments, and other factors. These estimates are
     subjective in nature, involve uncertainties and matters of judgment and,
     therefore, cannot be determined with precision. Changes in assumptions
     could significantly affect the estimates.

     Fair value estimates are based on financial instruments both on and off the
     balance sheet without attempting to estimate the value of anticipated
     future business, and the value of assets and liabilities that are not
     considered financial instruments. Additionally, tax consequences related to
     the realization of the unrealized gains and losses can have a potential
     effect on fair value estimates and have not been considered in many of the
     estimates.

     The following methods and assumptions were used to estimate the fair value
     of significant financial instruments:

     Financial Assets:

          The carrying amounts of cash, due from Banks and federal funds sold
          are considered to approximate fair value. The fair value of investment
          securities, including available for sale, are generally based on
          quoted market prices. The fair value of loans is


                                       54

<PAGE>

          estimated using a combination of techniques, including discounting
          estimated future cash flows and quoted market prices of similar
          instruments where available.

     Financial Liabilities:

          The carrying amounts of deposit liabilities payable on demand are
          considered to approximate fair value. For fixed maturity (time)
          deposits, fair value is estimated by discounting estimated future cash
          flows using currently offered rates for deposits of similar remaining
          maturities.

     Off-Balance Sheet Financial Instruments:

          The fair value of commitments to extend credit and standby letters of
          credit is estimated using the fees currently charged to enter into
          similar agreements.

     The estimated fair value of financial instruments at December 31, is
     summarized as follows:

<TABLE>
<CAPTION>
                                                                2006                          2005
                                                    ---------------------------   ---------------------------
                                                      CARRYING                      CARRYING
                                                       AMOUNT       FAIR VALUE       AMOUNT       FAIR VALUE
                                                    -------------  ------------   ------------   ------------
<S>                                                 <C>            <C>            <C>            <C>
Financial Assets:
   Cash, due from banks and
       federal funds sold                           $  7,367,773   $  7,367,773   $ 10,123,252   $ 10,123,252
   Securities available for
      sale                                            50,873,335     50,873,335     55,194,216     55,194,216
   Loans                                             204,318,993    203,467,447    180,207,390    179,658,280
   Accrued interest receivable                         1,354,041      1,354,041      1,230,777      1,230,777
Financial Liabilities:
   Demand deposits                                  $122,849,877   $122,849,877   $129,913,580   $129,913,580
   Time deposits                                     110,232,863    113,762,131     89,374,846     91,424,100
   Accrued interest payable                            1,071,990      1,071,990        611,512        611,512
   FHLB borrowings                                    18,500,000     18,500,000     17,800,000     17,800,000
   Securities sold under repurchase agreements                --             --             --             --
Off-Balance Sheet
   Financial Instruments:
   Letters of credit                                $         --   $      6,087   $         --   $     16,488
</TABLE>

NOTE 23. RELATED PARTY TRANSACTIONS

     In the ordinary course of business, the Bank has granted loans to executive
     officers, directors, and their affiliates amounting to $2,363,763 and
     $2,448,437 at December 31, 2006 and 2005, respectively. During 2006,
     $624,694 of new loans were made, or became reportable, and repayments and
     other decreases totaled $709,368. Deposits from related parties held by the
     Bank at December 31, 2006 and 2005 amounted to $5,167,964 and $5,794,438,
     respectively.


                                       55

<PAGE>

NOTE 24. PARENT COMPANY ONLY FINANCIAL INFORMATION

     The following represents parent company only financial information:

                STATEMENTS OF FINANCIAL CONDITION (PARENT ONLY)
                           DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                                2006          2005
                                                             -----------   -----------
<S>                                                          <C>           <C>
ASSETS
   Cash                                                      $   248,947   $        37
   Investment in CNB Bank, Inc.                               20,040,017    18,992,776
   Investment in Morgan County Title Insurance Agency, LLC         1,120         1,452
   Deferred income taxes                                              --            --
   Other assets                                                   30,961        11,795
                                                             -----------   -----------
      TOTAL ASSETS                                           $20,321,045   $19,006,060
                                                             ===========   ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
   Accrued expenses and other liabilities                    $    (1,217)  $    (1,981)
                                                             -----------   -----------
      TOTAL LIABILITIES                                      $    (1,217)  $    (1,981)
                                                             -----------   -----------
SHAREHOLDERS' EQUITY
   Common stock, $1 par value; 5,000,000 shares
      authorized; 458,048 shares outstanding                 $   458,048   $   458,048
   Capital surplus                                             4,163,592     4,163,592
   Retained earnings                                          17,421,402    15,658,134
   Accumulated other comprehensive income (loss)              (1,720,780)   (1,271,733)
                                                             -----------   -----------
      TOTAL SHAREHOLDERS' EQUITY                             $20,322,262   $19,008,041
                                                             -----------   -----------
      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY             $20,321,045   $19,006,060
                                                             ===========   ===========
</TABLE>

                       STATEMENTS OF INCOME (PARENT ONLY)
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                        2006         2005         2004
                                                     ----------   ----------   ----------
<S>                                                  <C>          <C>          <C>
Dividend income                                      $  855,394   $  659,589   $  662,106
Income from title company                                20,668       27,924       35,207
Noninterest expense                                     (66,610)     (44,744)     (58,038)
                                                     ----------   ----------   ----------
INCOME BEFORE INCOME TAXES AND EQUITY IN
   UNDISTRIBUTED EARNINGS OF CNB BANK, INC.          $  809,452   $  642,769   $  639,275
Income tax (expense) benefit                             12,922        6,844        7,595
                                                     ----------   ----------   ----------
INCOME BEFORE EQUITY IN UNDISTRIBUTED EARNINGS OF
   CNB BANK, INC.                                    $  822,374   $  649,613   $  646,870
Equity in undistributed earnings of CNB Bank, Inc.    1,646,288    1,795,966    1,696,823
                                                     ----------   ----------   ----------
NET INCOME                                           $2,468,662   $2,445,579   $2,343,693
                                                     ==========   ==========   ==========
</TABLE>


                                       56

<PAGE>

                     STATEMENTS OF CASH FLOWS (PARENT ONLY)
                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

<TABLE>
<CAPTION>
                                                              2006          2005          2004
                                                           -----------   -----------   -----------
<S>                                                        <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                 $ 2,468,662   $ 2,445,579   $ 2,343,693
Adjustments to reconcile net income to net cash
   provided by operating activities:
      Deferred income taxes                                         --           602           898
      (Increase) decrease in other assets                      (19,166)      (11,201)        1,507
      Increase (decrease) in accrued expenses and other
         liabilities                                               764        (2,061)           80
      Equity in undistributed earnings of CNB Bank, Inc.    (1,496,288)   (1,795,966)   (1,696,823)
                                                           -----------   -----------   -----------
         NET CASH PROVIDED BY OPERATING ACTIVITIES         $   953,972   $   636,953   $   649,355
                                                           -----------   -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
     Investment in title company                           $       332   $       575   $      (607)
                                                           -----------   -----------   -----------
         NET CASH PROVIDED BY (USED IN) INVESTING
            ACTIVITIES                                     $       332   $       575   $      (607)
                                                           -----------   -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
    Cash dividends paid                                    $  (705,394)  $  (659,589)  $  (632,106)
                                                           -----------   -----------   -----------
         NET CASH (USED IN) FINANCING ACTIVITIES           $  (705,394)  $  (659,589)  $  (632,106)
                                                           -----------   -----------   -----------
         NET INCREASE (DECREASE) IN CASH AND CASH
            EQUIVALENTS                                    $   248,910   $   (22,061)  $    16,642
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR             $        37   $    22,098   $     5,456
                                                           -----------   -----------   -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR                   $   248,947   $        37   $    22,098
                                                           ===========   ===========   ===========
</TABLE>


                                       57
<PAGE>

NOTE 25. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                            2006
                                           -------------------------------------
                                            FIRST     SECOND    THIRD     FOURTH
                                           QUARTER   QUARTER   QUARTER   QUARTER
                                           -------   -------   -------   -------
                                                        In thousands
<S>                                        <C>       <C>       <C>       <C>
Interest income                             $3,685   $ 3,900    $4,153   $4,251
Interest expense                             1,282     1,462     1,726    1,799
                                            ------   -------    ------   ------
Net interest income                          2,403     2,438     2,427    2,452
Provision for loan losses                      112        74        44       46
Noninterest income                             499       511       506      472
Noninterest expense                          2,020     1,910     1,873    1,976
                                            ------   -------    ------   ------
Income before income taxes                     770       965     1,016      902
Provision for income taxes                     238       318       386      321
                                            ------   -------    ------   ------
Net results from discontinued operations         1        79        --       (1)
Net income                                  $  533   $   726    $  630   $  580
                                            ======   =======    ======   ======
Basic earnings per share                    $ 1.16   $  1.59    $ 1.37   $ 1.27
                                            ======   =======    ======   ======
</TABLE>

<TABLE>
<CAPTION>
                                                            2005
                                           -------------------------------------
                                            FIRST     SECOND    THIRD     FOURTH
                                           QUARTER   QUARTER   QUARTER   QUARTER
                                           -------   -------   -------   -------
                                                        In thousands
<S>                                        <C>       <C>       <C>       <C>
Interest income                            $3,073     $3,282    $3,454   $3,611
Interest expense                              808        888     1,004    1,150
                                           ------     ------    ------   ------
Net interest income                         2,265      2,394     2,450    2,461
Provision for loan losses                     106        102        72       72
Noninterest income                            449        513       531      530
Noninterest expense                         1,771      1,926     1,892    1,952
Securities gains (losses)                      (2)         1         3      (18)
                                           ------     ------    ------   ------
Income before income taxes                    835        880     1,020      949
Provision for income taxes                    307        281       315      335
                                           ------     ------    ------   ------
Net income                                 $  528     $  599    $  705   $  614
                                           ======     ======    ======   ======
Basic earnings per share                   $ 1.15     $ 1.31    $ 1.54   $ 1.34
                                           ======     ======    ======   ======
</TABLE>


                                       58

<PAGE>

ITEM 9. CHANGES AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
     DISCLOSURE

     There were no changes in or disagreements with accountants in accounting
     and financial disclosure.

ITEM 9A. CONTROLS AND PROCEDURES

     The Company's chief executive officer and chief financial officer have
     concluded that as of December 31, 2006, which is the end of the period
     covered by this Annual Report on Form 10-K, the Company's disclosure
     controls and procedures are adequate and effective for purposes of Rule
     13(a)-15(e) and timely, alerting them to material information relating to
     the Company required to be included in the Company's filings with the
     Securities and Exchange Commission under the Securities Exchange Act of
     1934.

     There have been no changes in the Company's internal controls over
     financial reporting in the fiscal quarter ended December 31, 2006, that
     have materially affected, or are reasonably likely to materially affect,
     our internal controls over financial reporting.

ITEM 9B. OTHER INFORMATION

     None.


                                       59

<PAGE>

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The following table contains certain information, as of March 2, 2007, with
     respect to current directors, nominees for directors and certain officers
     of CNB.

<TABLE>
<CAPTION>
                              DIRECTOR     PRINCIPAL OCCUPATION FOR PAST FIVE YEARS
         NAME           AGE     SINCE             AND POSITION HELD WITH CNB
         ----           ---   --------   -------------------------------------------
<S>                     <C>   <C>        <C>
Kenneth W. Apple         50     2003     Certified Public Accountant

J. Robert Ayers          77     1974     Retired - President, Citizens National Bank
                                         (predecessor to CNB Bank, Inc.)

John E. Barker           78     1972     Auto Sales - Service

Margaret S. Bartles      52     2002     Realtor

Jay E. Dick              54     1983     Retired - Manager-Hunters' Hardware, Inc.

Herbert L. Eppinger      74     1979     Retired - Agriculture

Robert L. Hawvermale     77     1967     Retired - Professional Engineer

J. Philip Kesecker       77     1965     Real Estate Development

Jerry McGraw             60     1988     Insurance

Martha H. Quarantillo    47     1999     Pharmacist

Thomas F. Rokisky        60     1993     President and Chief Executive Officer,
                                         CNB and CNB Bank, Inc.

Charles S. Trump IV      46     1986     Attorney at Law

Arlie R. Yost            59     1988     Licensed Residential Appraiser
</TABLE>

     All nominees are incumbent directors of CNB Financial Services, Inc. All
     directors are independent except for Mr. Rokisky, President and CEO of CNB
     and Charles S. Trump IV, whose firm provides legal services for CNB.

     CNB's bylaws provide that the board of directors can set the number of
     directors but also provide that the board of directors must have no less
     than five nor more than 25 directors. The board of directors has set the
     number of directors to serve in 2007 at 13, which means that 13 directors
     will be elected at the 2007 Annual Meeting and will serve a term expiring
     at the next Annual Meeting or until a successor is selected.


                                       60
<PAGE>

     The names, ages and position of each executive officer of the company are
     listed below along with the positions with CNB Bank, Inc. held by each of
     them during the last five years. Officers are appointed annually by the
     Board of Directors at the meeting of directors immediately following the
     annual meeting.

<TABLE>
<CAPTION>
                            AGE AS OF
NAME                     MARCH 19, 2007                 POSITION AND EXPERIENCE DURING THE PAST 5 YEARS
----                     --------------   --------------------------------------------------------------------------
<S>                      <C>              <C>
J. Philip Kesecker (1)         77         2000 to present - Chairman of the Board, CNB Financial Services, Inc.
                                          1987 to present - Chairman of the Board, Citizens National Bank

Thomas F. Rokisky              60         2000 to present - President/CEO, CNB Financial Services, Inc.
                                          1996 to present - President/CEO, Citizens National Bank
                                          1990 to 1996 -  Executive Vice President/COO, Citizens National Bank

Rebecca S. Stotler             46         2000 to present - Vice President/CFO, CNB Financial Services, Inc.
                                          1999 to present - Vice President/CFO, Citizens National Bank
                                          1996 to 1999 - Vice President of Finance/Cashier, Citizens National Bank

Patricia C. Muldoon            46         2003 to present - Senior Vice President/COO, Citizens National Bank
                                          2001 to 2003 - Vice President/COO, Citizens National Bank
                                          1999 to 2001 - Consultant/Audit Staff, Smith Elliott Kearns & Company, LLC
                                          1997 to 1999 - VP/Mgr of Accounting Operations and Financial Reporting
                                             Farmers and Mechanics National Bank
</TABLE>

(1)  Mr. Kesecker is not an employee of CNB.

     CNB's board of directors has determined that Kenneth W. Apple, CPA, meets
     the requirements of an audit committee financial expert as defined by the
     Securities and Exchange Commission. The board of directors believes that
     Mr. Apple has the following five attributes that qualify him as an audit
     committee financial expert. This director, through education and
     experience, has:

          -    An understanding of financial statements and generally accepted
               accounting principles;

          -    An ability to assess the general application of generally
               accepted accounting principles in connection with accounting for
               estimates, accruals and reserves;

          -    Some experience in preparing, auditing, analyzing and evaluating
               financial statements that present a level of complexity of
               accounting issues comparable to the breadth of issues that could
               reasonably be expected to be presented by CNB's financial
               statements;

          -    An understanding of internal controls; and

          -    An understanding of audit committee functions.

     Mr. Apple acquired these attributes through his Bachelor of Science degree
     from Shepherd College in Shepherdstown, West Virginia, and over 20 years of
     experience in public accounting, including auditing.

     Section 16 (a) of the Securities Exchange Act of 1934 requires CNB's
     directors and executive officers, and persons who own more than 10% of the
     registered class of CNB's equity securities, to make stock ownership and
     transaction filings with the Securities and Exchange Commission and to
     provide copies to CNB. Based solely on a review of the reports furnished to
     CNB and written statements that no other reports were required, all Section
     16(a) filing requirements applicable to its officers and directors were
     met. CNB is required to report late filings.

<PAGE>

     CODES OF ETHICS

     Both CNB and the Bank have adopted Codes of Ethics as defined by the rules
     of the SEC. The Code of Ethics applies to all of CNB's and the Bank's
     directors, officers, including the Bank's Chief Executive Officer and Chief
     Financial Officer, and employees. Additionally, CNB and the Bank have
     adopted a Code of Ethics for Senior Financial Officers. The codes of ethics
     for all employees and for senior financial officers of CNB and the Bank
     have been filed as an exhibit to this Annual Report on Form 10-K. If CNB or
     the Bank makes substantive amendments to the Code of Ethics or the Code of
     Ethics for Senior Financial Officers or grants any waiver, including any
     implicit waiver, that applies to any director or executive officer of CNB
     or the Bank, it will disclose the nature of such amendment or waiver on the
     website or in a report on Form 8-K in accordance with applicable SEC rules.

ITEM 11. EXECUTIVE COMPENSATION

     The personnel committee of the board of directors has furnished the
     following report on executive compensation. The personnel committee has not
     adopted a charter.

     GENERAL PHILOSOPHY

     We compensate our senior management through base salary and a benefits
     package designed to be competitive with comparable employers. We do not
     believe that it is appropriate to establish compensation levels primarily
     based on benchmarking. We do believe, however, that information regarding
     pay practices at other financial institutions is useful in at least two
     respects. First, we recognize that our compensation practices must be
     competitive in the marketplace. Second, this marketplace information is one
     of the many factors that the President and the Personnel Committee consider
     in assessing the reasonableness of compensation. The President and the
     Personnel Committee do not attempt to set salaries for executive officers
     within the industry peer ranges. As only a guideline, the individual
     executive officer's salaries are compared to the salary survey ranges for
     the specific job classifications to ensure competitiveness in the market.
     The President and the Personnel Committee rely more on individual
     performance and contribution to the bank, reporting structure, internal pay
     relationship, job responsibilities, growth potential, leadership abilities
     and the overall bank's performance for the previous year.

     The committee establishes the compensation for the Chief Executive Officer
     of CNB and the bank and reviews all personnel related issues including
     salary administration related to other employees and benefit programs. The
     CEO establishes compensation levels for executive officers and all other
     personnel which is reviewed by the personnel committee. Committee
     objectives include administration of a total compensation package that
     allows CNB to fill key executive positions with qualified individuals and
     to utilize effective compensation programs which are directly related to
     executive officers accomplishing corporate goals and objectives, both
     operational and financial, aimed at achieving lasting improvement in CNB's
     long-term financial performance. We rely upon our judgment about each
     individual executive officer and not on rigid formulas or short-term
     changes in business performance in determining the amount.

               The corporate goals and objectives include:

          -    Increase return on shareholders' investment

          -    Increase return on assets

          -    Increase return on equity

          -    Increase market share

          -    Continued strong asset growth

          -    Maintain a high quality loan portfolio with strong underwriting
               standards

          -    Maintain a high quality investment portfolio

     The committee and the CEO utilize human resources' staff, and, as
     appropriate, other qualified consultants to review compensation practices
     as they compare to industry norms. In 2006, the committee relied only on
     CNB's human resources' staff for information concerning industry norms.

     COMPENSATION PROGRAMS

     The committee utilizes an internal salary administration plan for the basis
     of its analysis of compensation levels throughout CNB, including the CEO.
     The plan includes job descriptions for all positions and considers the
     overall responsibility of each position based on characteristics including
     job knowledge, problem-solving, accountability,


                                       62

<PAGE>

     human relations, communications, supervision of others and marketing.
     Salary ranges for each position are developed based on market information
     available for similar positions at financial institutions both in the
     communities where CNB does business and outside its market area. Salary
     surveys utilized include those provided by the West Virginia Bankers
     Association and Topnet (a group of West Virginia non-competing independent
     community banks). These results are used annually by the human resources
     staff to update the salary administration plan using current market data
     which reflects marketplace changes, inflation, and, if applicable,
     corporate performance. The salary surveys performed a comparison study of
     the current compensation of the CEO and other executive officers at the
     bank with comparable financial institutions (the "Peer Group"). The Peer
     Group was used to provide information regarding executive compensation
     levels against other financial institutions of similar asset size. The
     Personnel Committee reviews the compensation data compiled in these surveys
     to ensure that our executive compensation program is competitive.

     The individual components of CNB's compensation program include:

          (a)  Base Salary.

          a. Base salary levels are established for the CEO primarily based upon
          evaluation of the historical performance, degree of responsibility,
          level of experience and number of years with CNB. With respect to the
          base salary granted to Mr. Rokisky for the year 2006, the committee
          took into account the performance during 2005 and information referred
          to above. Particular emphasis was placed on Mr. Rokisky's individual
          performance, including his leadership role through a period of
          continued growth, and CNB's continued strong financial performance.
          For the year 2007, the committee has established certain goals and
          objectives for the CEO to attain. The achievement of these goals and
          objectives may contribute to future salary increases. In comparing Mr.
          Rokisky's salary to financial institutions in the Peer Group, his
          salary falls in the average range. Mr. Rokisky has no input into the
          determination of his salary.

          b. Base salary levels are established for the Sr. VP/COO and the
          VP/CFO primarily based upon evaluation of their historical
          performance, degree of responsibility, industry average percentage
          increase and the bank's performance for the previous year. Mr. Rokisky
          determines the salaries for these individuals. As a guideline, Mr.
          Rokisky compares these individual salaries to the salary survey ranges
          for these job classifications from the West Virginia Bankers
          Association and Topnet.

          (b)  Annual Incentives/Bonuses.

          Bonuses are not granted to senior officers as a regular component of
          compensation. Contributions to the 401(k) plan on behalf of all
          employees who defer into the plan are based on bank performance as a
          percentage of assets.

     The committee believes that the total compensation awarded to the CEO and
     other executive officers of CNB is consistent with the committee's
     objectives. The amounts paid to individual executives are consistent with
     competition within the market and with banks of similar size as reflected
     by individual performance of each executive, and are rationally linked with
     the fulfillment of corporate objectives and corporate financial
     performance.

     The following table sets forth for each of the Executive Officers: (a) the
     dollar value of base salary and bonus earned during the year ended December
     31, 2006; (b) the change in pension value and nonqualified deferred
     compensation earnings during the year, (c) all other compensation for the
     year; and, finally, (d) the dollar value of total compensation for the
     year.


                                       63

<PAGE>

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                   CHANGE IN
                                                    PENSION
                                                     VALUE
                                                      AND
                                                 NONQUALIFIED
                                                   DEFERRED
 Name and Principal                              COMPENSATION   OTHER ANNUAL        TOTAL
      Position         YEAR    SALARY    BONUS     EARNINGS     COMPENSATION    COMPENSATION
 ------------------    ----   --------   -----   ------------   ------------    ------------
<S>                    <C>    <C>        <C>     <C>            <C>             <C>
Thomas F. Rokisky,
President/CEO          2006   $140,571    $--       $77,148     $23,906 (1)(2)    $241,625

Patricia C. Muldoon,
Sr. VP/COO             2006   $ 85,075    $--       $ 7,563     $ 3,158 (1)(2)    $ 95,796

Rebecca S. Stotler,
VP/CFO                 2006   $ 67,695    $--       $ 9,184     $ 2,510 (1)(2)    $ 79,389
</TABLE>

          (1) CNB's group life and health insurance program, which is paid for
          by CNB, is made available to all full-time employees. Effective
          January 1, 2005, the bank changed its health insurance program to a
          high deductible plan and concurrently established health reimbursement
          accounts for each employee on the plan. The bank funded $750 for each
          participant in 2005. In accordance with IRS Code Section 79, the cost
          of group life insurance coverage for an individual in excess of
          $50,000 is added to the individual's earnings and is included in
          salary.

               Also included in this figure are board fees earned and the
          corporation's contributions to the individual's 401(k) retirement
          savings program to which the individual has a vested interest. CNB
          maintains a 401(k) profit sharing plan that generally covers all
          employees who have completed one year of service. Contributions to the
          plan are based on bank performance as a percentage of assets and are
          computed as a percentage of the participant's total deferrals into the
          plan. The payment of benefits to participants is made at death,
          disability, termination or retirement. Contributions to the plan for
          all employees charged to operations during 2006 amounted to $64,750.

          (2) CNB's contributions to the pension plan, a defined benefit plan,
          are not and cannot be calculated separately for specific participants.
          Contributions for the plan year of $413,170, $285,150 and $249,348
          were made by CNB in 2006, 2005 and 2004, respectively.

     CNB does not maintain any form of stock option, stock appreciation rights,
     or other long-term compensation plans.

     The following table discloses the actuarial present value of each Senior
     Executive's accumulated benefit under defined benefit plans, the number of
     years of credited service under each plan, and the amount of pension
     benefits paid to each Senior Executive during the year.

                             PENSION BENEFITS TABLE

<TABLE>
<CAPTION>
                                                           NUMBER                     PAYMENTS
                                                             OF                        DURING
                                                            YEARS     PRESENT VALUE     LAST
                                                          CREDITED   OF ACCUMULATED    FISCAL
              NAME                       PLAN NAME         SERVICE       BENEFIT        YEAR
              ----                 --------------------   --------   --------------   --------
<S>                                <C>                    <C>        <C>              <C>
Thomas F. Rokisky, President/CEO   WVBA Retirement Plan      17         $256,498         $--
                                         NSRP (1)            --         $ 97,924         $--
Patricia C. Muldoon, Sr. VP/COO    WVBA Retirement Plan       5         $ 27,543         $--
Rebecca S. Stotler, VP/CFO         WVBA Retirement Plan      23         $ 57,629         $--
</TABLE>


                                       64

<PAGE>

          (1) Effective January 2, 2004, CNB entered into a nonqualified
          supplemental retirement plan (NSRP) with the President which when
          fully vested would pay the President or his beneficiary an amount of
          $30,000 per year for 10 years beginning June 11, 2011, if he retires
          on or after May 29, 2011. Termination of employment prior to that date
          other than by reasons of death or disability will result in a reduced
          benefit. The expense charged to operations related to the plan during
          2006 amounted to $32,641. The benefits to be provided by this plan are
          not being funded by current resources.

     CNB maintains a non-contributory defined benefit pension plan with employer
     contributions being based on a pension formula, which targets a certain
     monthly benefit for each plan participant at retirement. This pension plan
     is a qualified retirement plan and is available to all full-time employees,
     including officers, who meet the eligibility requirements. Directors do not
     participate in this plan.

     The pension plan is integrated with social security and is applicable to
     all participants. Pensions for all participants are based on an average of
     the highest five-years compensation. Annual compensation for the pension
     plan is defined as the total cash remuneration reportable on the employee's
     IRS form W-2, plus pre-tax contributions to employee benefit plans. The
     formula for determining the annual pension benefit is 2.0 percent of the
     5-year average compensation multiplied by years of service up to a 25-year
     maximum effective for the plan year beginning November 1, 2004.

     The pension benefits are payable to participants on a monthly basis in the
     form of a joint and 50 percent survivor annuity for all married
     participants who do not elect otherwise, or in the form of a single life
     annuity for all other participants or survivors. Joint and 100 percent
     survivorship, single life annuity or 120 payments guaranteed are other
     optional forms of distribution. The normal retirement date for employees is
     the later of the participant's 65th birthday, or the fifth anniversary of
     the participant joining the plan. An employee must be at least 21 years of
     age and have one full year of service to become a plan participant. Full
     vesting in accumulated plan benefits occurs at the end of five years of
     service; there is no partial vesting. For the 2006 plan year, the employer
     contribution for all plan participants was $413,170.

     The following table disclosed the cash and other compensation earned and
     paid to each of the Company's directors during the fiscal year ended 2006.

                     SUMMARY COMPENSATION TABLE - DIRECTORS

<TABLE>
<CAPTION>
                                               CHANGE IN
                                             PENSION VALUE
                                                  AND
                                              NONQUALIFIED
                               FEES EARNED      DEFERRED
                                OR PAID IN    COMPENSATION     ALL OTHER        TOTAL
         NAME           YEAR       CASH       EARNINGS (1)   COMPENSATION   COMPENSATION
         ----           ----   -----------   -------------   ------------   ------------
<S>                     <C>    <C>           <C>             <C>            <C>
J. Philip Kesecker      2006     $21,050        $    --           $--          $21,050
Kenneth W. Apple        2006     $17,275        $    --           $--          $17,275
J. Robert Ayers         2006     $16,150        $    --           $--          $16,150
John E. Barker          2006     $15,750        $    --           $--          $15,750
Margaret S. Bartles     2006     $15,275        $ 2,854           $--          $18,129
Jay E. Dick             2006     $16,775        $35,170           $--          $51,945
Herbert L. Eppinger     2006     $17,377        $   661           $--          $18,038
Robert L. Hawvermale    2006     $14,952        $    --           $--          $14,952
Jerald McGraw           2006     $16,800        $21,279           $--          $38,079
Martha H. Quarantillo   2006     $13,950        $ 2,854           $--          $16,804
Thomas F. Rokisky (2)   2006     $10,900        $    --           $--          $10,900
Charles S. Trump IV     2006     $13,875        $19,092           $--          $32,967
Arlie R. Yost           2006     $15,350        $21,279           $--          $36,629
</TABLE>

(1)  Refer to page 7 Board Compensation for a more detailed discussion of the
     director's deferred compensation plan.

(2)  Executive officer of CNB


                                       65
<PAGE>

     Directors receive $200 for each board meeting of the bank they attend, $175
     for each discount committee meeting, $150 for each audit committee meeting
     and $100 for other committee meetings they attend. There is no compensation
     for attendance at CNB board meetings. In addition, each director receives a
     fee of $6,000 per year. The chairman of the board receives an additional
     $3,500 per year and the vice chairman receives an additional $1,000 per
     year. Other than the deferred compensation plan described below, there are
     no other special arrangements with any directors. In 2006, the board of
     directors of CNB received $205,125, in the aggregate, for all board of
     directors' meetings attended and all fees paid.

     CNB maintains a deferred compensation plan for directors pursuant to which
     a director may elect to defer receipt of a portion of fees for board
     meetings for at least four years or until he reaches age 65, whichever is
     later. An amount equal to fees waived in addition to interest at an annual
     rate of 10% per year will be paid to each participating director or his
     designated beneficiary during a period of 10 years after the director
     reaches age 65. The payments after retirement will be paid from the general
     funds of CNB. CNB purchases and is the beneficiary of insurance on the
     lives of participants, the proceeds of which are used to help recover the
     net after-tax cost of the benefits and insurance premiums paid. Funds from
     the deferred fees of a participating director will be used to reimburse CNB
     for the costs of the premium for the insurance policies. The cost of the
     insurance premiums in 2006 was $58,822. At December 31, 2006, these
     policies had a net accumulated cash value of $1,394,521.

     PERSONNEL COMMITTEE REPORT

     The Personnel Committee held two meetings during fiscal year 2006. The
     Personnel Committee has reviewed and discussed the Compensation Discussion
     and Analysis required by Item 402(b) of Regulation S-K with management.
     Based upon such review, the related discussions and such other matters
     deemed relevant and appropriate by the Personnel Committee, the Personnel
     Committee has recommended to the Board of Directors that the Compensation
     Discussion and Analysis be included in the annual report, Form 10-K and the
     proxy statement.

     The foregoing report has been furnished by the current members of the
     personnel committee.

          Jay E. Dick, Personnel Committee Chairperson
          Robert L. Hawvermale, Personnel Committee Member
          Herbert L. Eppinger, Personnel Committee Member
          Charles S. Trump IV, Personnel Committee Member
          J. Robert Ayers, Personnel Committee Member
          J. Philip Kesecker, Ex-Officio member

          December 5, 2006

     This report shall not be deemed to be incorporated by reference into any
     filing under the Securities Act of 1933, as amended, or the Securities
     Exchange Act of 1934, as amended, unless CNB specifically incorporates this
     report by reference. It will not otherwise be filed under such Acts.

     PERSONNEL COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

     Loans were made to various directors and officers of CNB. These loans were
     made in the ordinary course of business, made on substantially the same
     terms, including interest rate and collateral requirements, as those
     prevailing at the time for comparable transactions with unrelated customers
     and did not involve more than a normal risk of collectibility or present
     other unfavorable features. Members of the personnel committee during 2006
     were Jay E. Dick, chairman, Messrs. Hawvermale, Eppinger, Trump and Ayers.
     Mr. Kesecker serves as an ex-officio member of this committee. Mr. Ayers is
     a retired President of Citizens National Bank predecessor to CNB Bank, Inc.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT

     The following table sets forth information as of February 21, 2007,
     relating to the beneficial ownership of the common stock by (a) each person
     or group known by CNB to own beneficially more than 5% of the outstanding
     common stock; (b) each of CNB's directors; and (c) all directors and
     executive officers of CNB as a group. Unless otherwise noted below, the
     persons named in the table have sole investment power with respect to each
     of the shares reported as beneficially owned by such person.


                                       66

<PAGE>

<TABLE>
<CAPTION>
                                                                    NUMBER OF   PERCENT OF
                         NAME AND ADDRESS                             SHARES     CLASS (1)
                         ----------------                           ---------   ----------
<S>                                                                 <C>         <C>
Kenneth W. Apple (2) (15)                                              1,650           *
J. Robert Ayers (3) (15)                                               1,415           *
John E. Barker (4) (15)                                               18,162        3.97
Margaret S. Bartles (5) (15)                                             200           *
Jay E. Dick (6) (15)                                                  15,691        3.43
Herbert L. Eppinger (7) (15)                                           2,870           *
Robert L. Hawvermale (8) (15)                                          3,730           *
J. Philip Kesecker (9) (15)                                           13,632        2.98
Jerald McGraw (10) (15)                                                1,514           *
Martha H. Quarantillo (15)                                               400           *
Thomas F. Rokisky (11) (15)                                            1,544           *
Charles S. Trump IV (12) (15)                                         11,410        2.49
Arlie R. Yost (13) (15)                                                2,210           *
Rebecca S. Stotler (14) (15)                                             194           *
All directors and executive officers as a group (14 persons) (15)     74,622       16.29
D. Louise Stotler and Deborah Dhayer
   RR 6 Box 12460, Berkeley Springs, WV, 25411                        47,488       10.37
Mary Lou Trump
   RR 7 Box 12840, Berkeley Springs, WV, 25411                        53,470       11.67
</TABLE>

*    Indicates holdings of less than 1%.

(1)  Includes shares of common stock held by the named individual as of February
     21, 2007.

(2)  Includes 1,000 shares held in an Individual Retirement Account.

(3)  Includes 1,315 shares held jointly with spouse.

(4)  Includes 14,300 shares held jointly with spouse and 3,562 shares held
     jointly with children.

(5)  Includes 100 shares held jointly with spouse.

(6)  Includes 15,591 shares held jointly with spouse.

(7)  Includes 2,770 shares held jointly with spouse.

(8)  Includes 1,200 shares held by spouse and 100 shares held jointly with
     spouse.

(9)  Includes 3,098 shares held by spouse and 1,860 shares held jointly with
     spouse and 350 held in an educational trust.

(10) Includes 110 shares held by spouse and 964 shares held jointly with spouse.

(11) Includes 1,425 shares held in an Individual Retirement Account.

(12) Includes 200 shares held in an Individual Retirement Account, 842 shares
     held by spouse and 300 shares held as custodian for children.

(13) Includes 1,770 shares held jointly with spouse.

(14) Includes 108 shares held jointly with spouse, 74 shares held by spouse and
     12 shares held jointly with child.

(15) Unless otherwise indicated shares are not pledged as security.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     CNB has had and intends to continue to have banking and financial
     transactions in the ordinary course of business with directors and
     executive officers of CNB and their associates. All executive officer and
     director and their associates loans are approved prior to disbursement by
     the discount committee and/or the board of directors. These approvals are
     evidenced by the discount committee and/or Board minutes. The bank's loan
     policy and Regulation "O" policy governs these transactions. Total loans
     outstanding from CNB at December 31, 2006, to CNB's officers and directors
     as a group and members of their immediate families and companies in which
     they had an ownership interest of 10% or more was $1,987,927, or
     approximately 8.3% of total equity capital and .8% of total loans.
     Management believes that all of these transactions were made on
     substantially the same terms (including interest


                                       67

<PAGE>

     rates, collateral and repayment terms on loans) as comparable transactions
     with non-affiliated persons. These loans do not involve more than the
     normal risk of collectibility or present other unfavorable features.

     All nominees are incumbent directors of CNB Financial Services, Inc. All
     directors are independent except for Mr. Rokisky, President and CEO of CNB
     and Charles S. Trump IV, whose firm provides legal services for CNB.

     Trump and Trump, in which director Charles S. Trump, IV is a partner,
     performed legal services for CNB and the bank. Fees paid by CNB and the
     bank to that law firm were $43,463 during 2006.

     CNB, Charles S. Trump, IV and George I. McVey are members in a Limited
     Liability Company, Morgan County Title Insurance Agency, LLC, which was
     formed in February 2001. Morgan County Title Insurance Agency, LLC, paid
     Trump and Trump management fees of $32,300. Charles S. Trump, IV and George
     I. McVey are partners in Trump and Trump.

ITEM 14. PRINCIPAL ACCOUNTANT'S FEES AND SERVICES

     The firm of Smith Elliott Kearns & Company, LLC, Certified Public
     Accountants, has been selected as CNB's independent registered public firm
     for the year 2007. Representatives of Smith Elliott Kearns & Company, LLC
     are expected to be present at the Annual Meeting. The representatives may,
     if they wish, make a statement and, it is expected, will be available to
     respond to appropriate questions.

     Smith Elliott Kearns & Company, LLC, advised CNB that no member of that
     accounting firm has any direct or indirect material interest in CNB or its
     subsidiary.

     The following fees were paid by CNB and the bank to Smith Elliott Kearns &
     Company, LLC:

<TABLE>
<CAPTION>
                           2006      2005
                         -------   -------
<S>                      <C>       <C>
Audit Fees               $68,400   $59,100
Audit-Related Fees (a)       -0-       900
Tax Fees (b)              10,010     8,650
All Other Fees (c)         5,500     8,100
</TABLE>

     (a)  Principally consultation about the application of accounting
          principles to specific transactions and consultation about internal
          control matters.

     (b) Principally tax compliance services (including federal and state
          returns).

     (c)  Principally consultation related to tax depreciation and agreed upon
          procedures related to the trust department.

     The audit committee charter requires that the audit committee pre-approve
     all audit and non-audit services to be provided to the company by the
     independent accountants; provided, however, that the audit committee has
     specifically authorized its chairman to pre-approve the provision of any
     non-audit service to the company. Further, the foregoing pre-approval
     policies may be waived, with respect to the provision of any non-audit
     services consistent with the exceptions for federal securities law. All of
     the services described above for which Smith Elliott Kearns & Company, LLC
     billed the company for the fiscal year ended December 31, 2006, were
     pre-approved by the company's audit committee. For the fiscal year ended
     December 31, 2006, the company's audit committee did not waive the
     pre-approval requirement of any non-audit services to be provided to CNB by
     Smith Elliott Kearns & Company, LLC.

     The audit committee of the board of directors has determined that the
     provision of such services is compatible with maintaining Smith Elliott
     Kearns & Company, LLC's independence.


                                       68

<PAGE>

                                     PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)  1. Financial Statements

     The consolidated financial statements listed on the index to Item 8 of this
     Annual Report on Form 10-K are filed as a part of this Annual Report.

     2. Financial Statement Schedules

     All schedules applicable to the Registrant are shown in the respective
     financial statements or in the notes thereto included in this Annual
     Report.

     3. Exhibits

     2.2  Articles of Incorporation of CNB Financial Services, Inc. filed as
          exhibit 3.1 to the Registration Statement on Form S-4 , Registration
          No. 333-36186, filed May 3, 2000 with the Securities and Exchange
          Commission and incorporated by reference herein.

     2.3  Bylaws of CNB Financial Services, Inc. filed as exhibit 3.2 to the
          Registration Statement on Form S-4, Registration No. 333-36186, filed
          May 3, 2000 with the Securities and Exchange Commission and
          incorporated by reference herein.

     14   Code of Ethics filed as an exhibit hereto.

     21   Subsidiaries of CNB Financial Services, Inc. filed as an exhibit
          hereto.

     31.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002

     31.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley
          Act of 2002

     32.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002

     32.2 Certification of the Chief Financial Officer pursuant to 18 U.S.C.
          Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
          Act of 2002

(b)  See (a) 3 above.

(c)  See (a) 1 and 2 above.


                                       69

<PAGE>

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                        CNB Financial Services, Inc.
                                        (Registrant)


Date March 30, 2007                     /s/ Thomas F. Rokisky
                                        ----------------------------------------
                                        Thomas F. Rokisky, President/CEO


Date March 30, 2007                     /s/ Rebecca S. Stotler
                                        ----------------------------------------
                                        Rebecca S. Stotler, Vice President/CFO
                                        (Principal Financial and Accounting
                                        Officer)


                                       70

<PAGE>

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities indicated on the 23th March 2007.

<TABLE>
<CAPTION>
              Signatures                           Title
              ----------                --------------------------
<S>                                     <C>


/s/ J. Philip Kesecker                  Chairman and Director
-------------------------------------
J. PHILIP KESECKER


/s/ Thomas F. Rokisky                   President/CEO and Director
-------------------------------------
THOMAS F. ROKISKY


/s/ Kenneth W. Apple                    Director
-------------------------------------
KENNETH W. APPLE


/s/ J. Robert Ayers                     Director
-------------------------------------
J. ROBERT AYERS


/s/ John E. Barker                      Director
-------------------------------------
JOHN E. BARKER


/s/ Margaret S. Bartles                 Director
-------------------------------------
MARGARET S. BARTLES


/s/ Jay E. Dick                         Director
-------------------------------------
JAY E. DICK


/s/ Herbert L. Eppinger                 Director
-------------------------------------
HERBERT L. EPPINGER


/s/ Robert L. Hawvermale                Director
-------------------------------------
ROBERT L. HAWVERMALE


/s/ Jerald McGraw                       Director
-------------------------------------
JERALD MCGRAW


/s/ Martha H. Quarantillo               Director
-------------------------------------
MARTHA H. QUARANTILLO


/s/ Charles S. Trump IV                 Director
-------------------------------------
CHARLES S. TRUMP IV


/s/ Arlie R. Yost                       Director
-------------------------------------
ARLIE R. YOST
</TABLE>


                                       71